ZAMBIA S ECONOMIC STATUS

Transcription

1 ZAMBIA S ECONOMIC STATUS MISELO BWALYA - PMRC RESEARCHER PUBLIC LECTURE GO 2017 UNLOCKING ZAMBIA S POTENTIAL

2 ABOUT PMRC The Policy Monioring and Research Cenre (PMRC) is a pblic policy research hink ank whose vision is Unlocking Zambia s Poenial. PMRC STATED AIM Prodcing high qaliy, relevan and imely pblic policy analysis, delivery monioring and reform proposals. Promoing and encoraging informed pblic debae on criical social and economic policy isses criical o naional developmen. To deliver is mandae, PMRC works wih, and leverages from he programmaic, informaion, commnicaion and oreach neworks of varios insiions and organisaions. These inclde governmenal, civil sociey and ciizen grops. This approach of collaboraion has enhanced PMRC s relevance o naional developmen hrogh awareness of pblic policy. ABOUT PMRC

3 GLOBAL ECONOMIC DEVELOPMENTS IN Economic growh in 2016 is projeced a 3.1 percen, a rae slighly lower han he 3.2 percen recorded in % ECONOMIC GROTH IN % ECONOMIC GROTH IN World rade is projeced o grow by 2.3 percen in This is lower han he 2.6 percen growh recorded in Emerging and developing economies, growh is projeced o srenghen slighly o 4.2 percen in 2016 from 4.0 percen in % WORLD TRADE PROJECTION % WORLD TRADE PROJECTION % 4.2% ECONOMIC GROTH IN 2015 ECONOMIC GROTH IN In Sb-Saharan Africa, growh is projeced o fall o 1.4 percen in 2016 from 3.4 percen in % SUB-SAHARAN AFRICA GROWTH % SUB-SAHARAN AFRICA GROWTH2016 GLOBAL ECONOMIC DEVELOPMENT IN

4 DOMESTIC ECONOMIC DEVELOPMENTS IN 2016 n Zambian economy faced a nmber of challenges. n These inclded low commodiy prices inclding copper; n Elecriciy deficis, n High inflaion, n A deerioraed exernal secor and n Governmen s challenge o flly finance is commimens. n Growh is herefore, projeced o be js above 3 percen in 2016 agains a arge of 5.0 percen and o marginally rise o 3.4 percen in 2017 DOMESTIC ECONOMIC DEVELOPMENTS IN

5 2017 TARGETS Macroeconomic Olook for 2017: Achieve real GDP growh of a leas 3.4 percen; 1. Aain end year inflaion of no more han 9.0 percen; 2. Aain domesic revene mobilizaion of a leas 18.0 percen of GDP; 3. Limi he overall fiscal defici o no more han 7.0 percen of GDP on a cash basis; 4. Mainain domesic borrowing o no more han 2 percen of GDP; 5. Bild p foreign exchange reserves o a leas 3 monhs of impor cover by end 2017; and 6. Sppor he creaion of a leas 100,000 decen jobs TARGETS 3

6 WHERE ARE WE NOW?

7 ANNUAL GROWTH RATE (GDP) ngrowh in 2017 is projeced o rise o 4.3% agains an iniial forecas of 3.4%. Growh is aribed o; Increased agriclral op Recovering generaion for elecriciy Higher mining op sppored by beer prices and power spply Oher secors inclde consrcion, wholesale and rade and orism secors. ANNUAL GROWTH RATES 4

8 INFLATION Inflaion ha closed he end of 2016 a 7.5% redced frher o 6.5% in May As of Jly inflaion sood a 6.6% Inflaion Redcion is aribed o; Conined sabiliy of he exchange rae lower food prices in view of a good harves Improved marke confidence in he conry s policy direcion Inflaion is projeced o remain in single digis in INFLATION 5

9 EXCHANGE RATE The sabiliy of he crrency is aribed o; The Kwacha agains major crrencies has remained sable, wih a bias owards an appreciaion. The Kwacha appreciaed agains he US dollar o an average of K9.34 in May 2017 from K9.92 in December Improved spply of foreign exchange, Beer olook for copper prices and posiive marke senimen. As of Ags 2017, he Kwacha appreciaed by 4.5 % agains he U.S dollar o K9.32. This has been aribed o he improved spply of foreign exchange from he mining secor and non-residen invesors in Governmen secriies. EXCHANGE RATE 6

10 ZAMBIA UNEMPLOYMENT RATE n Unemploymen Rae in Zambia increased o percen in 2014 from percen in 2013 n Unemploymen Rae in Zambia averaged percen from 1986 nil 2014, n Reaching an all ime high of percen in 1993 and a record low of percen in 1998 ZAMBIA UNEMPLOYMENT RATE 7

11 FOREIGN RESERVES nthe n Governmen s goal is o aain 4 monhs of impor cover over he medim-erm. nas n a End-May 2017, foreign reserves sood a US $2.4 billion, which ranslaed o arond 3.3 monhs of impor cover. FOREIGN RESERVES 8

12 LENDING RATES n Average lending rae for 2017, are 28%, a level ha limis lending o he privae secor. Average n lending rae for 2016 were 29%. Effors n o lower he cos of credi and increase lending o he privae secor, have been made. Boh he policy rae and saory reserve raio were redced o 12.5% from 15.5%, and from 18.0%, respecively. These n were frher redced by Bank of Zambia. Policy Rae redced from 12.5% o 11%. Saory Reserve Raios were frher redced from 12.5% o 9.5%. LENDING RATES 9

13 FISCAL PERFORMANCE n Revenes nder-performed by 10% compared o he bdge. This has been aribed o; n Low ax compliance by axpayers, n Delayed implemenaion of bdge measres sch as land iling, insallaion of elecronic fiscal devices o improve ax collecions. FISCAL PERFORMANCE 10

14 EXTERNAL DEBT n Exernal deb sock as a End-May 2017 increased o US$7.2 billion from US$6.9 billion in December, This has been aribed o; n Increase in he sock was on accon of new disbrsemens. EXTERNAL DEBT 11

15 DOMESTIC DEBT n The domesic deb sock was K38.6 billion in May 2017 compared o K33 billion in December This has been aribed o; n The rise is explained by increased demand for Governmen paper. n In order o ensre conined deb ssainabiliy, Governmen has finalized a Medim Term Deb Sraegy ha provides a framework for prden deb managemen. DOMESTIC DEBT 12

16 STOCK OF GOVERNMENT ARREARS n As a End-March, 2017, he sock of Domesic arrears was K17.35 billion. nin 2017 alone, he Governmen has paid o a oal of K4.3 billion owards clearance of arrears. n To address he arrears siaion in a ssainable manner, Governmen has designed a ime-specific arrearsdismanling sraegy. STOCK OF GOVERNMENT ARREARS 13

17 STRUCTURAL REFORMS n The fll roll-o of he Inegraed Financial Managemen Informaion Sysem (IFMIS) and fll implemenaion of he Treasry Single Accon (TSA) by he end of n Fll implemenaion of he e-vocher sysem nder he Farmer Inp Sppor Programme (FISP). n Revision of a nmber of laws inclding he Pblic Finance Ac, a new Zambia Pblic Procremen Bill, review of he Loans and Garanees (Ahorizaion) Ac and inrodcion of he Planning and Bdgeing Bill o Parliamen. STRUCTURAL REFORMS 14

18 THE MEDIUM-TERM OUTLOOK n Growh over he medim-erm is forecas o rise o a leas 5.0%. Growh will be mainly driven by he agriclre, energy, mining, consrcion and manfacring secors. n The exchange rae sabiliy will be ssained while inflaion is projeced o be wihin he arge range of 6-8%. n Pressre on he exernal secor, is expeced o conine in 2017 mainly aribed o he slow pick p in expor earnings. However, he exernal secor is expeced o rebond in he medim-erm, largely driven by he expeced increase in copper and nonradiional expor earnings. THE MEDIUM - TERM OUTLOOK 15

19 GOVERNMENT S ENGAGEMENT WITH THE IMF n Governmen and he IMF agreed on remaining acions needed before agreemen on a programme ha cold be sppored nder he IMF s Exended Credi. n When he agreed reqired acions are implemened in he nex few weeks, he Programme cold be presened o he Board in Ags n The major isses reqired o be addressed for s o proceed o conclsion mainly relae o; n Higher han projeced bdge deficis, n Accmlaion of arrears and n An increase in deb levels. GOVERNMENT S ENGAGEMENT WITH THE IMF 16

20 THANK YOU Unlocking Zambia's Poenial Response o his presenaion can be sen o: info@pmrczambia.ne Plo No. 36c Sable Road, Kablonga, Lsaka, Zambia, Privae Bag KL 10 Tel: HOME