KABANDA CHULU, Lusaka
ZAMBIA needs continued reforms if the country is to sustain the current economic growth trajectory, Standard Chartered Bank chief economist for Zambia Razia Khan says.
Dr Khan said the economy is on track for stronger growth in 2017 due to the anticipated private sector credit growth and expected rise in copper production.
“The economy is recovering, and there is optimism things will turn around especially, if the Central Bank doesn’t tighten monetary policy too much. This way a there will be increased private sector liquidity and copper production will exceed 800,000 tonnes.
“Also the International Monetary Fund-supported programme will act as a guarantee to attract continued investments but what is important is to implement and sustain economic reforms to ensure stronger growth,” she said in an interview, when she visited Zambia last week.
She said debt levels were rising in the sub Saharan region and problems may arise if the debts (bonds) mature during the same period.
“Zambia has been spending very badly, but its debt levels are below 40 percent of the Gross Domestic Product (GDP) so it is sustainable and manageable especially with strong fiscal policies. We are seeing Government implementing measures to clear debts and arrears and this is beneficial in the longer term,”
Dr Khan said.
She said foreign investors appear optimistic on the outlook of the Zambian economy as can be seen by the increase in non-resident holdings of government securities.
“But this becomes a problem when foreigners own a huge stock of domestic debt because when shocks occur, the economy becomes vulnerable.
“Zambia should keep an eye on South Africa, which is the region’s biggest economy and has been downgraded by two rating agencies. This can have implications since investors will have a cautious look on the entire region,” Dr Khan said.