Minister of Finance and National Planning, Situmbeko Musokotwane has urged the World Bank to streamline the approval of projects processes in the Bank.
He said Zambia has experienced extended delays in the approval of the country’s projects, an example being the extended period of approval under the Irrigation Development and Support Project which has taken many years to be approved.
Musokotwane made these remarks when he met with the World Bank Managing Director Ngozi Okonjo Iweala at the World Bank offices in Washington DC.
The World Bank Board of Directors approved a US$115 million credit for the Irrigation Development and Support Project (IDSP) on 7th April, 2011 to enable Zambia to overhaul its irrigation subsector.
Zambia’s Sixth National Development Plan’s goal for the agriculture sector is toi increase and diversify agriculture production and productivity so as to raise the share of its contribution to the GDP by 2015.
The project, which will be developed in proposed selected sites, is expected to be implemented over seven years, by June 2018
Musokotwane also noted that Zambia’s resources under the International Development Association (IDA) window is not adequate to support the level of investment that Zambia envisages to implement over the Sixth National Development Plan period.
He said having attained the lower middle income status, it was the Government’s view that the World Bank should grant access to the International Bank for Reconstruction and Development (IBRD) Financing by reclassifying Zambia as an IDA/IBRD blend country.
This, he said, would increase assist Zambia access the level of resources required to support the plan.
Turning to the performance of the Zambian economy in 2010, the Minister of Finance told the World Bank Managing Director that Zambia’s economy grew to 7.6 percent in 2010 compared to 6.4 percent in 2009.
The growth was driven by a second consecutive bumper harvest in agriculture, rising copper production, transport and communication.
He said the macroeconomic environment was also favourable with inflation recorded at 7.9 percent. This, he said, was below the target of 8 percent for the year.
Musokotwane also noted that there was general stability in the exchange rate with a bias towards appreciation of the Kwacha against the US dollar and the Euro. He added that there was a continued downward trend in lending rates to about 26.4 percent at the end of 2010 from 29.2 percent at the end of 2009
The Minister further stated that the external sector performance continued to be positive, with an expansion in the current account surplus to 2.3 percent of GDP in 2010, from 1.3 percent of GDP in 2009.
On account of increased mining tax collections, he said the fiscal position was generally favourable.
He said in 2011, and the medium term, the economy is expected to continue with its positive performance, with growth estimated to 6.8 percent in 2011 and to average 6-7 percent per annum over the next five years.
Musokotwane also stated that the Sixth National Development Plan (SNDP) for 2011 – 2015 that was launched in early February, 2011 aims, among other things, at enhancing the competitiveness of the economy through infrastructure and human development. He said the projects in the paln require huge amounts of resources which the Zambian government expected the Bank to play a crucial role.
The Finance Minister informed Ms. Ngozi Okonjo Iweala that the recent two ratings of B+ that Zambia was assigned by Fitch and Standard and Poor in March 2011 would now enable the country to tap into the international markets to raise financing for infrastructure development and also enable the country to enter the international market in order to issue a bond within the course of 2011.
In response, the World Bank Managing Director, Ms. Ngozi Okonjo Iweala said she was optimistic that Zambia would continue sustaining strong economic growth recorded in recent years coupled with the high global rating on account of consistent prudent economic management among various factors
She said it was gratifying to note that Zambia was among the top ten economic performers in Africa in the category of Doing Business . This, she said, gives hope to the Bank that a lot has been done.
She, however, noted that despite all these positives, Zambia had challenges in infrastructure development that needed to be improved.