Choose Your Language Of Preference Below
French Version German Version Russian Version Spanish Version
By Shapi Shacinda
LUSAKA (Reuters) – Zambia has enough currency reserves to protect the economy in case the illness of President Levy Mwanawasa prompts some reduction in foreign investment, central bank Governor Caleb Fundanga said on Tuesday.
Fundanga said the only slight worry of the Bank of Zambia (BoZ) was rising oil and food prices, which threatened its single digit inflation target. However, he remained optimistic of achieving 7.0 percent annual inflation in December this year.
Fundanga said it was evident the illness of Mwanawasa, who is in a French hospital after suffering a second stroke, had caused anxiety among some investors but that there was “no need for panic”.
“The investors in the mines will continue exporting copper. It is possible that … some investors may decide to pull out, but we have enough reserves, $1.4 billion held by the Bank of Zambia and another $1 billion by commercial banks,” Fundanga told a news conference, adding Zambia had 5.6 months of import cover.
Mwanawasa impressed the International Monetary Fund and other Western donors by cracking down on government spending and launching an anti-corruption drive.
Fundanga said Zambia had investment pledges totalling $1.8 billion so far this year compared with just $1 billion in the first six months of 2007. The government has previously said a number of these investments have been fulfilled.
“Naturally, as a result of the illness of the captain, as some refer to the president, there are some people who might be feeling uncomfortable. Given this situation, are we vulnerable? Will all forex (foreign exchange) dry up? The answer is ‘no’,” Fundanga added.
He said mining and non-traditional sectors had continued to perform satisfactorily with copper export earnings for the three months to June just 0.1 percent lower than the previous quarter’s earnings, at $967.6 million.
Fundanga said non-traditional exports at $187.6 million at end-June were 12.3 percent above the $167.1 million recorded in the previous quarter ending in March.
“Favourable export earnings have led to the strengthening of the external sector reflected in the appreciation of the kwacha against major currencies and a 10 percent increase in international reserves to $1,338.4 billion in June 2008 from $1,216.3 billion in March 2008,” he said.
There were inflationary pressures from a 15 percent wage increase for civil servants from January and from higher global oil prices, which would put pressure on transport and commodity prices.
“However, these pressures may be mitigated by pass-through effects of the appreciation of the exchange rate of the (Zambian) kwacha against major currencies on account of external sector performance,” Fundanga said.
Fundanga said the kwacha appreciated 11.3 percent against the dollar in the three months to June to trade at an average of 3,259/dollar.
“We cannot give up on 7.0 percent inflation at the end of the year because we have enough food to feed ourselves and we will not necessarily be affected by global food prices,” he added.
(Lusaka newsroom + 260-977843609/260-955779523)
© Reuters 2008. All Rights Reserved.
July 16, 2008 at 3:47 pm
If Dr. Caleb Fundanga ever wanted to run for president of the Zambian Enterprise, I would be the first one to second my good friend Chanda Chisala’s move to nominate him for the position no matter the party affiliation(s).
Zambian is greater than any single one of us and this Manchester educated economist would be top picks for the Zambian Chronicle. Problem is, no one knows if any one could convince him to run or if he even has political ambitions of his own at all … thanks a trillion.
July 16, 2008 at 4:01 pm
yeah, this guy needs to be any one’s (party’s) short list for the next president.
it would take some convincing to do but hey, duty calls.
July 16, 2008 at 4:02 pm
I agree, seriously
July 16, 2008 at 4:03 pm
does any one know what political party he belongs to, but again, I don’t even care which one …
July 16, 2008 at 4:06 pm
Dr. Fundanga would outshine any one of these quasi politicians I know pa Zed. Most of them are in it for money or fame, Doc would be in it for the country coz he already has the money and fame anyway.
July 16, 2008 at 10:23 pm
I agree
December 8, 2008 at 7:39 am
[…] reserves increased from zero at the time he took over to $1.4 billion. In fact as we report today, Zambia has FX reserves to protect against any outflows, says Central Bank Governor Dr. Caleb Fundang… In terms of percentage growth, the number is actually infinity because nothing can be divided […]