By STEVEN ZANDE –

THE Bank of Zambia (BoZ) has projected positive economic growth from 2016 onwards despite the challenging economic outlook the country is experiencing now. BoZ Governor Denny Kalyalya said at the presentation of the Monetary Policy Committee statement in Lusaka yesterday that the macroeconomic outlook of the country was challenging but positive. “The external sector is expected to remain challenging with modest global growth, with low commodity prices. On the domestic front, real Gross Domestic Product (GDP) growth is projected to improve marginally in 2016, but to strengthen significantly thereafter,” Dr Kalyalya said. The adverse weather conditions and the continuing rationing of power are expected to continue to constrain growth. Dr Kalyalya said these constraints are expected to ease as additional power is brought on line and the worst effects of El Nino recede. BoZ would continue to monitor domestic and external developments closely and was ready to take appropriate monetary policy measures to support price and financial system stability. This was key to macroeconomic stability which is essential for growth and development. The Govermor, however, said that the Central Bank would not attempt to interfere with the market by flooding it with money for instance. Dr Kalyalya said despite Zambia having recorded 3.6 per cent GDP growth against a projection of seven per cent last year, economic prospects this year were high. He said the current challenges have made it necessary for the Central Bank to maintain the 15.5 per cent Policy Rate in order to maintain financial stability and help contain inflation. Dr Kalyalya said tight monetary measures which were introduced last year have helped to control inflation, but annual inflation would take time to revert to single digit. He said inflation this year is expected to remain double digit between 10 and 15 per cent. Despite challenges in the economy, the construction and manufacturing sectors have registered growth. He said the country should capitalise on sectors that were performing well to spur economic growth. The country should also increase its exports. Dr Kalyalya said the Central Bank has since instituted an information centre to provide regular updates to commercial banks.He said the weakening of the Kwacha against major currencies was partly due to sentimental statements made by the public.
Dr Kalyalya said stakeholders should issue responsible statements if Zambia’s economy was to attract investors.
On the country’s debt, he said it was close to sustainability because it had been affected by the depreciation of the Kwacha. In 2015, Zambia paid $450 million towards debt servicing.