Zambia has raised its 2010 economic growth forecast to 6.6 percent from a June forecast of 5.8 percent after a higher than expected performance in the first half of the year, Finance Minister Situmbeko Musokotwane has announced.
“We adjusted the growth forecast to 6.6 percent from 5.8 percent because we now know that mining, agriculture and tourism all performed better than we had expected,” Musokotwane said at a media briefing.
Musokotwane said Zambia's economic growth between 2011 and 2013 should average 6.5 percent per annum partly due to a global recovery over the period.
Zambia in June cut its growth forecast for 2010 to 5.8 percent due to the possibility of sluggish recovery but senior Treasury officials said growth was still likely to come in above the new forecast.
GDP growth in Africa's largest copper producer was previously forecast at seven percent this year and eight percent in 2011.
The overall budget deficit between 2011 and 2013 was expected to widen to an average 3.5 percent of GDP compared with 2.5 percent in the 2008-2010 period mainly due to spending in infrastructure and the social sector.
To fund that expenditure, Musokotwane said Zambia would borrow $2bn, raising the debt ratio to 14.9 percent of GDP from 9.1 percent, which was still sustainable.
“We will borrow both locally and internationally and some of this money will come from multilateral lending institutions,” secretary to the treasury, Likolo Ndalemei told reporters when pressed for details.
Musokotwane said the government had not changed its end-of-the-year inflation target of eight percent and it expected CPI to remain in single digits between 2011 and 2013.
“These projections are premised on food prices and the exchange rate remaining stable,” Musokotwane said.
The central bank has previously said a strong kwacha will help contain inflation and mitigate the impact of a recent 26 percent rise in power prices.