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Zambia on course for 6.5% growth – BoZ

THE Bank of Zambia (BoZ) is confident that the country’s growth target of 6.5 percent will be maintained with a possibility of an even higher rate being achieved this year.
BoZ Governor Michael Gondwe said at a media briefing yesterday that the bank’s Monetary Policy Committee (MPC) noted that the financial sector remains well capitalised, profitable and stable, and that the fundamentals of the Zambian economy remain strong.
Dr Gondwe said inflation remains elevated at 7.9 percent in October, 2014.
“Our forecasts are that inflation will remain at these elevated levels throughout the rest of the year and into 2015. This is above the inflation target of 7 percent for end-December 2015 announced by the Minister of Finance in the 2015 budget speech,” he said.
Dr Gondwe said to ensure the levelling off of inflation pressures over the third quarter is consolidated into lower inflation next year, the MPC decided to increase the BoZ policy rate by 50 basis points to 12.5 percent.
He also said during the third quarter, the foreign exchange market was characterised by lower volatility and that the Kwacha appreciated against most of its major trading partner currencies. The Kwacha however remained relatively flat against the US dollar.
Dr Gondwe said external sector performance deteriorated during the third quarter, with the overall balance of payments recording a deficit of US$123.2 million, compared to a surplus of US$740 million during the second quarter of the year.
He said there was an improvement in demand for treasury bills during the third quarter, particularly from foreign investors with the subscription rate improving to 122.5 percent from 56.3 percent in the second quarter.
Dr Gondwe said at the end of September, the outstanding stock of government securities registered an increase of 1.4 percent to K21.1 billion compared with K20.5 billion at end of June this year.
On domestic credit and interest rates, Dr Gondwe said the growth in both domestic credit and broad money rebounded during the third quarter after registering sharp declines during the second quarter of the year following the tightening in monetary policy.

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