THE International Monetary Fund (IMF) has said Zambia’s economic outlook remains strong, but urged the Government to deal with excessive debt because it will cloud out the investment needed to develop the economy.
IMF resident representative Tobias Rasmussen said the prospect for continued strong growth remains bright for Zambia, but maintaining supportive polices was important.
Speaking at the American Chamber of Commerce meeting in Lusaka yesterday, Dr Rasmussen said it was worrisome to see how Zambia’s fiscal position had deteriorated so rapidly.
He said the moderate recourse to borrowing had been one of the major supporters of growth and transformation of the Zambian economy.
Dr Rasmussen said if debt was directed into investment, infrastructure and other types of capital expenditure, it would improve the economy.
He said it was important that the deficit does not continue to overshoot what was budgeted for, saying that excessive reliance on debt would cloud out the investment that was needed to grow the economy.
Dr Rasmussen said the transformation of the Zambian economy was becoming more entrenched adding that the economy was developing and transitioning out of being reliant on one particular product.
“The most encouraging progress has been on the Non-Traditional Exports (NTEs). Zambia has for a decade been reliant on copper production and getting almost its export revenue from copper but in the past three years we have seen NTEs growing at an annual average rate of 50 per cent,” he said.
Dr Rasmussen said the main driver of the change had been the Foreign Direct Investment (FDI) mainly from mining, manufacturing and agriculture.
“We have seen a siege in the FDI in Zambia, the recent survey by the Bank of Zambia indicated that a total FDI amounted to almost US$2 billion in 2012 with a billion of that going into copper which has been traditionally been a destination for vast majority of the FDI in Zambia,” he said.
Dr Rasmussen said the manufacturing sector received half a billion of FDI which was a big step forward and another sign of the diversification of the economy.
He said the fundamentals for Zambia’s economy are strong unpinned by enormous resource the country has.
Dr Rasmussen said Zambia was well positioned as a regional exporter.
[Times of Zambia]