Zambia has announced a 10 per cent devaluation, in a series of measures designed to strengthen its economy.
LV & CU EXTERIOR Finance Ministry building (3 shots)
CU Minister of Finance Mr. John Mwanakatwe speaking (3 shots)
MR. MWANAKATWE: "All of you are aware that the economy has been ailing for some time now, in three main respects. The persistent budgetary -- government budgetary deficits. We have had, secondly, the problem with the balance of payment deficits. Then thirdly, this is unique for Zambia; the mining companies have suffered serious losses during the past 24 months approximately. We have in the course of our negotiations with the recent IMF mission to Zambia recognised the fact that the economy of Zambia cannot be corrected ... the ailing economy ... cannot be corrected if we do not take drastic measures to restrict credit expansion. In other words, both Government, the government itself, as well as the mining companies must be restricted in terms of borrowing from the banking system."
Two large copper mining companies form the backbone of the Zambian economy. The companies, Roan Consolidated Mines and Nchanga Consolidated Copper Mines are expected to make heavy losses this year, because of low world prices for copper.
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Background: Zambia has announced a 10 per cent devaluation, in a series of measures designed to strengthen its economy. The Finance Minister, Mr. John Mwanakatwe told the Parliament in Lusaka on Friday (17 March) that because of the serious economic situation facing Zambia, the Government had reached agreement with the International Monetary Fund (I.M.F) to borrow 322.6 million kwacha (390 million dollars). He said Zambia had agreed to an IMF request to reduce its balance of payments deficit next year. To move in this direction the government is to impose limits on its own borrowing, and an interim waged and incomes policy is ??? to be introduced.
SYNOPSIS: After the announcement, Mr. Mwanakatwe explained the reasons for Zambia's economic problems, at a news conference at the Finance Ministry.