Sata’s re-election not guaranteed- EIU April report on Zambia

Sata’s re-election not guaranteed- EIU April report on Zambia

sataEconomic Intelligence Unit- April report on Zambia

Outlook for 2014-18

·         Political stability will be maintained but will be marred by sporadic unrest as the government continues to antagonise the opposition and voters’ dissatisfaction with poor governance and economic policy intensifies.

·         Despite waning popular support and internal fractiousness, the president, Michael Sata, and the Patriotic Front (PF) will ride out the rest of their term until the next elections, in 2016, but Mr. Sata’s re-election is not guaranteed.

·         The government will focus on boosting mining revenue, supporting local investment and reducing unemployment. The government’s susceptibility to populism risks undermining policy delivery and economic growth.

·         Real GDP growth is forecast to average 6.8% in 2014 18, supported by large investments in infrastructure and mines, a surge in copper production and robust growth in services and manufacturing.

·         The kwacha is forecast to depreciate in 2014-17, to an average of ZK6.43:US$1 in 2017. It will strengthen in 2018 as the current-account surplus widens.

·         The current-account position is expected to improve over the forecast period as production of copper—Zambia’s main export—rises sharply. The balance will turn positive in 2015 as the trade surplus continues to widen.

Review

·         The US State Department’s 2013 human rights report on Zambia has highlighted serious abuses by the country’s security forces, including arbitrary killings and torture.

·         The embattled tourism minister, Sylvia Masebo, was sacked on March 20th in the wake of a small ministerial reshuffle.

·         Loans totaling US$204m have been obtained from Chinese, Swedish and South African lenders to extend grid power to parts of the underdeveloped North-Western and Western provinces.

·         A new pipeline from Dar es Salaam in Tanzania is being planned to import refined oil products.

·         The government is seeking US$250m in funding for urgent repairs to the Kariba Dam after it showed cracks that could potentially cause it to collapse within three years if not addressed.

·         The central bank has acted aggressively to support the falling kwacha, raising its benchmark policy rate by 175 basis points, to 12%, on March 28th, increas ing its statutory reserve requirement, and selling US$178m in foreign reserves.

·         The government has revoked two unpopular restrictions on the capital account. The kwacha has since recovered slightly from an all-time low of ZK6.43:US$1 on March 19th.

 

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