ANGELA CHISHIMBA, Lusaka
THE World Bank has projected headway in Zambia’s economic recovery plan in 2017 on account of better electricity situation and improved copper exports.
Last year, Zambia continued to face slower growth as a result of tough global conditions, combined with domestic challenges, including power outages, tight liquidity, and limited appetite for economic reform during the first half of 2016.
“The 2017 forecast assumes progress with the economic recovery plan, a better electricity situation than in 2015 and 2016, and improved copper exports.
“For the medium term, it assumes even higher copper production, that copper prices will recover marginally, and that progress will be made with structural reforms identified in the 2017 budget,” according to the eighth World Bank Zambia Economic Brief presented by World Bank economist Ziv Chinzara.
Mr Chinzara said the 2017 national budget and economic recovery programme provide a good framework to support a return to faster and more inclusive growth.
He said given the tough global conditions for growth and domestic challenges, gross domestic product (GDP) growth is forecast to improve in 2017 at four percent and 4.2 percent in 2018.
Mr Chinzara said there is need for fiscal and monetary policy to work in tandem for faster growth.
“What remains critical is that any reduction in the fiscal deficit is planned and managed carefully. A disorderly and incomplete adjustment will not restore market confidence. A too severe or too quick adjustment will undermine growth,” he said.
He, however, said the implementation of the 2016 budget was characterised by weak commitment control and deteriorating budget credibility.
Mr Chinzara said monetary policy helped moderate inflation and supported exchange rate stability, but at the price of an increased cost of borrowing, a low availability of credit, and a drawdown in reserves, all of which have added an extra drag on growth.