NEVER WALK ALONE

Zambia 2014 | ECONOMY | B2B: INTERNATIONAL FINANCING

Global institutions are always on hand to lend their support to developing economies.

Kundhavi Kadiresan
KUNDHAVI KADIRESAN
Country Director - Malawi, Zambia, Zimbabwe
The World Bank
Tobias Nybo Rasmussen
TOBIAS NYBO RASMUSSEN
Resident Representative
International Monetary Fund

What role has the institution played in Zambia over the last 50 years?

KUNDHAVI KADIRESAN The bank was in this country even before independence. The first project that we funded was the Kariba Dam in 1955. If you are looking for the overall support in Zambia, we deliver more than just funding support. We also provide technical assistance, policy dialogue, analytical work, and knowledge exchange programs. By this I mean that we are not just another bank giving only money. We package that with the very serious diagnoses that need to be done in terms of the deeper issues. For example, if we are talking about agriculture, we would do a very deep analysis of the constraints on the agriculture sector and on the policies and programs that can help address those constraints. These are often done in a very consultative way along with the government, other development partners, and other stakeholders. When we know what the issues are, we put some funding in to provide support.

TOBIAS NYBO RASMUSSEN We've been quite closely involved in Zambia over the years, especially since the economy was liberalized in the early 1990s. We've been working together with the government, providing support to the Ministry of Finance and the Bank of Zambia (BoZ). Through most of that period since the early 1990s Zambia had economic programs, as we call it, with the IMF. For the past three years Zambia hasn't borrowed money from us, and we don't have a formal program in that sense. But we still have close discussions with the government and provide advice. A lot of what we do is technical assistance. We have teams of experts working in various areas. They support ongoing institutional development and the development of policies. We have a large program in cooperation with the Central Bank of Norway to support modernization of the BoZ, which has been moving toward an inflation-targeting regime, and the IMF has been providing technical assistance in that area. We also provide technical assistance in economic statistics, including in the area of national accounts. We've participated in the project of rebasing the GDP, which was completed in 2014. We have a technical assistance project in the Zambian revenue authority to support tax administration. We also have a program in Public Financial Management (PFM) at the Ministry of Finance. We have a range of technical assistance programs.

What's your outlook for the Zambian economy?

KK We must look at the medium term and long term. It continues to be positive, but we hope that the global copper prices remain as strong as they have been in the past few years. This country is very exposed to external shocks because it depends so heavily on the copper economy. In that sense it continues to be positive, but continued diversification presents a positive prospect for continued growth.

TNR We can look at a lot of lessons from the past here, and the dynamics that are in place. The key is to maintain the support factors that have allowed growth to average over 7% over the past 10 years. These support factors include macroeconomic stability, anchored by low inflation and moderate fiscal deficits, and business-friendly policies. Zambia has everything going for it in terms of maintaining high growth and our outlook is very positive. With the support factors remaining in place, we project growth to remain high.