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To: ms.smartest.person who wrote (764)	2/26/2006 4:36:21 AM
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Copper helps Zambia to its feet Howard Preece & David McKay Posted: Fri, 24 Feb 2006 [miningmx.com] -- THERE has been a major improvement in both the management and performance of Zambia's economy. That's the finding of the executive directorate of the International Monetary Fund (IMF). In a report published this month, the IMF board said: "The Zambian economy has achieved sustained robust growth in recent years, a marked turnaround after more than two decades of stagnation and falling per capita incomes." Said the IMF: "During 2000/2005, growth in real gross domestic product (GDP) averaged 4,5% a year, as the mining sector recovered substantially in response to privatisation and rising copper prices. The construction sector performed particularly well, driven by strong housing demand." "Inflation has been reduced in recent years but remains high. Zambia's external position has strengthened, thanks to the rebound in copper and relatively strong growth of non-traditional exports," it said. However, the IMF cautioned: "International reserves remain low. Also, in spite of the improvements in growth, poverty is still widespread and the economy continues to be vulnerable to climatic conditions and trade shocks." Speaking at the Emerging Mining Congress in Livingstone earlier this month, Zambia’s deputy president, Lupando Mwape, said that while the rebirth of the copper industry had contributed to growth in the economy, diversification was essential. “It is said that Zambia was born with a copper spoon in its mouth. But history has shown the need for diversification in an economy. We want the private sector to join hands with government,” Mwape said. Mining of gold, diamonds and other gemstones, and nickel are being encouraged by government. It’s not quite known, however, what the Zambian government intends to do about its royalty system. Mwape said at the congress that its relatively meagre 0,6% mineral royalty was a major incentivisation for foreign investment. But there has been talk that amid growing interest in the country’s mineral reserves, this could be altered. Still, mining is expected to remain the mainstay of the economy. According to Mwape, government wants to make the sector comprise 20% of gross domestic product over the next 25 years. Between 2001 and 2004, about $1.4bn has been invested in copper mining. Free news alerts: click here to subscribe In its report, the IMF said: “In 2005, real economic growth is estimated to have moderated to 4,3% from 5,4% in 2004, owing to a drought-related shortfall in maize and temporary disruptions in the mining industry from labour disputes and accidents." "Inflation remained in the high teens during most of 2005, partly through drought-induced increases in food prices and rising oil costs before dropping to 15,9% at year-end as the tightening of monetary policy and sharp appreciation of the Zambian kwacha restrained inflation pressures." Finally, and vitally, the IMF said: "A substantial fiscal adjustment in 2004 has helped to put the public finances on a sustainable course. State spending restraint cut the budget deficit from 6,6% of GDP to 1,7%." This article is a printout from Miningmx.com Copyright © 2004 miningmx.com