afrol News, 9 February - Economic growth in Zambia has finally hit the 5 percent benchmark, according to newly released statistics. The relatively high growth rate took government officials by surprise as they had only targeted a 3.5 percent growth rate for 2004 in their budget. This is the fifth year that GDP grows faster than the population, but social conditions remain difficult.

According to the latest assessment of economic performance in Zambia by the International Monetary Fund (IMF), released today, 2004 has been a better year than predicted. Missions from the IMF and the World Bank, returning from Lusaka today, had analysed the latest trends together with a team of Zambian government officials and discussed economic policies for 2005.

- Zambia's economic performance continued to improve during 2004, the IMF mission concluded. "Boosted by increased production in the mining, agriculture, construction and service sectors, real GDP is estimated to have increased by 5 percent in 2004, significantly above the budget target of 3.5 percent."

According to the IMF, this was the fifth year in a row of real GDP growth averaging over 4 percent. Since 2000, real GDP growth in Zambia has fluctuated around 4 percent, with a maximum of 4.9 percent growth in 2001. With a population growth of approximately 2.6 percent, this means that the average Zambian slowly has become richer each year in this century.

This slow growth is however following nearly two decades of generally declining output, in the 1980s and the 1990s, meaning that average Zambians still are worse off than in the 1970s. "Despite the creditable improvement in economic performance, Zambia's social conditions remain difficult," also the IMF mission to the country admits. The growth since 2000 has not been equally distributed among Zambians.

Further in 2004, fuel prices increased sharply, but the rate of inflation was held to 17.5 percent, well below the original target of 20 percent. The recovering main industries of Zambia, principally mining and agriculture, had led to a general recovery of the economy.

The IMF mission also expressed satisfaction at economic reforms conducted in late 2004. The Zambian government had "sharply reduced its domestic borrowing in 2004, helping to ease pressure on interest rates and prices." Reforms targeted for December last year had been implemented.

Also regarding poverty reduction, authorities in 2004 had implemented their programmes. "Releases for expenditures on priority poverty reduction programmes were in line with the budget," the IMF report said. These expenditures mostly relate to the education and health sectors, but also to privatisation and administrative reforms, which the IMF defines as "poverty reduction".

The Zambian government is currently heading towards reduction of its foreign debts, as defined by the Heavily Indebted Poor Countries (HIPC) Initiative. "Information received indicates that all triggers relating to poverty reduction and social sectors have been met. Substantial progress has also been made in meeting conditions in other areas," the IMF said.

No date was given of when Zambia can expect to see its substantial foreign debt reduced. The IMF mission however indicated that the Fund and the World Bank soon were to meet in Washington to analyse whether Zambia had complied with the demands to have its debt reduced. If this is the case, up to 90 percent of the country's debt could be annulled.

By staff writer

© afrol News

Related pages and feature

Current afrol News Top Stories