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Yearender: Zambia's economy improves in 2017 despite armyworms, debt, corruption

Xinhua,January 01, 2018 Adjust font size:

LUSAKA, Dec. 31 (Xinhua) -- Zambia's economy has started showing signs of improvement after the economic meltdown of 2015 and 2016 caused by falling commodity prices and a power deficit due to insufficient rains.

The country's economy has started picking up from the economic downturn with the country's central bank projecting that growth prospects would improve over the medium-term, with Gross Domestic Product (GDP) for 2017 and 2018 projected at 4.2 and 5.0 percent respectively from 3.8 percent recorded last year.

Already, the economy has grown by 3.1 percent during the first three quarters of 2017, according to preliminary figures released by the country's statistics agency.

This is due to good performances in the construction, manufacturing and electricity generation industries.

However, attacks on plants by armyworms, which have been reported in various parts of the country, as well as delays in the distribution of farming inputs to smallholder farmers under a government subsidized program, may affect agricultural production, according to analysts.

The failure to reach a bailout agreement with the International Monetary Fund (IMF) was a major hallmark of the year.

The government said in September that it would resume talks on an IMF aid program in October and was hoping to get an aid package before the end of 2017.

But so far, indications are that the aid package will not be concluded this year after IMF expressed concerns over the country's rising public debt situation.

The IMF has already stated its concern over Zambia's public debt which it said was growing unsustainably and putting the country at high risk of debt distress.

According to IMF figures, public guaranteed debt increased from 36 percent of gross domestic product at the end of 2014 to 60 percent as at the end of 2016.

The two parties have since agreed to chart a new path towards debt sustainability while the government has come up with a debt management strategy which has become a center of the talks.

Felix Mutati, the country's finance minister, has assured of the government's resolve to deal with the rising debt problem.

The minister, who acknowledged that the country's debt was approaching unsustainable levels, said the government was slowing down on borrowing in order to curtail the rising the debt.

"In order to ensure continued debt sustainability, government has finalized a medium term debt strategy that provides a framework for prudent management. Further, regular debt sustainability analysis will be the guiding principle for future borrowing activities," he said in a statement presented in parliament.

According to government figures, Zambia's public debt stood at 12.45 billion U.S. dollars in August 2017, representing 47 percent of gross domestic product (GDP), with the external debt standing at 7.5 billion dollars.

On the other hand, the revelation by the 2016 Auditor General's report that there was increased misappropriation of public resources received a backlash, especially during a time when the country was trying to tighten public expenditure which has resulted in a budget deficit.

While the government moved in quickly to assure citizens that culprits cited in the report will be dealt with, stakeholders are not convinced as the trend has been the same over the years.

"The rate at which public resources are being misappropriated and stolen for personal gain by those in authority today is unprecedented, worrying and has reached alarming heart breaking levels to ordinary Zambians," said Maxon Nkhoma, Coordinator of the Civil Society for Poverty Reduction (CSPR), a local organization involved in poverty fighting programs.

"If left unchecked this has potential to make the national treasury bankrupt," said Nkhoma. Enditem