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LUSAKA (Reuters) – Zambia on Friday vowed to continue with a prudent macroeconomic and monetary stance despite the serious illness of its President Levy Mwanawasa, amid concern over the future of economic policy.

Finance Minister Ng’andu Magande and central bank Governor Caleb Fundanga moved to assure investors nothing would change in Mwanawasa’s absence.

“The president’s illness will not change anything because we have in place solid reforms, procedures and systems which have given confidence to many people,” Magande told Reuters in an interview.

Zambia, a major copper producer, would continue with prudent fiscal and sound monetary policy.

“I can’t see that because we are unable to say ‘Good Morning’ to the president, then the Bank of Zambia will break down, or the finance minister will fail to perform,” he said.

Zambia’s kwacha weakened to 3,390 against the U.S. dollar on Friday from 3,150 on Tuesday when the seriousness of Mwanawasa’s illness became clear.

“Personally, I see nothing to worry about because the kwacha has had these movements before … I don’t see any problems. In fact, we have sufficient reserves to do business,” Fundanga added.

The southern African country’s leader was rushed to hospital on Sunday in the Egyptian resort of Sharm el-Sheikh after suffering a stroke just before an African Union summit.

He was later transferred to Paris for treatment and the government was forced on Thursday to dismiss rumours and reports that he had died.


Mwanawasa, 59, is a favourite of the International Monetary Fund and other Western donors, who extended billions of dollars in debt relief after he cracked down on government spending and launched an anti-graft drive.

His policies have helped usher in strong economic growth, which averaged 5 percent over the last six years, while inflation declined to single digits in April 2006, for the first time in over three decades.

“Offshore investors are looking at reducing their risks in the Zambian kwacha until there is proper clarification about the president’s health,” said a treasurer of a commercial bank, who declined to be named.

“The markets are not comfortable, they are jittery and anxious.”

Another senior manager of a separate commercial bank said he expected the currency to strengthen once there was “concrete and positive news” about Mwanawasa’s health.

“What is key is positive news on the president’s health and concrete assurances that there will be no change in government economic policy,” the bank manager said.

“The jitters are temporal in as far as we are concerned because the investment climate is intact.”

Magande said Mwanawasa’s ministers were given the scope to implement policy without interference.

“The reforms are imbedded in government policy. The president has not been supervising the minister of finance or the (BoZ) governor. But he has instructed us to carry out government policy.”

This included efforts to meet a target growth rate of 7.5 percent growth and to keep inflation within single digits, he said.

Growth in 2008 is forecast at 7 percent.

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