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Zambia Democratic Republic of Congo Zambia at a Glance: 2002-03 COUNTRY REPORT Zambia Democratic Republic of Congo Zambia at a glance: 2002-03 OVERVIEW Presidential, legislative and municipal elections are likely to be held in either late November or early December 2001. The presidential candidate of the ruling MMD party, Levy Mwanawasa, will face a strong challenge from Christon Tembo, of the opposition FDD party. It is unlikely that the MMD will win an overall majority in the legislative election, but it and the FDD will be well represented in the new parliament. We expect the kwacha to continue to weaken, to an average of ZK4,389:US$1 in 2002 and ZK5,142:US$1 in 2003. Mainly because of improved food production, the average inflation rate is expected to fall to 20.5% in 2002 and 17.6% in 2003. The current-account deficit is forecast to narrow from 4% of GDP in 2002 to 2.9% of GDP in 2003, largely as a result of higher mining export revenue and lower debt-service payments. Key changes from last month Political outlook • The MMD’s decision to bar seven ministers from standing at the forthcoming legislative election suggests that they are being purged because they are FDD party sympathisers. Economic policy outlook • The government’s economic policy priority for 2002-03 is to produce a full poverty reduction strategy paper and then begin to implement it. However, it now looks likely to be delayed until mid-2002. Economic forecast • We have lowered our forecast of real GDP growth to 4.3% in 2002 despite increased mining output, because of weak copper demand and prices. Real GDP growth will pick up to 4.6% in 2003 as the US economy recovers and world copper demand strengthens. November 2001 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through our digital portfolio, where our latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2001 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1369-4839 Symbols in tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. 1 Contents 3 Summary Zambia 5 Political structure 6 Economic structure 6 Annual indicators 7 Quarterly indicators 8 Outlook for 2002-03 8 Political outlook 8 Economic policy outlook 10 Economic forecast 13 The political scene 18 Economic policy 21 The domestic economy 21 Economic trends 22 Mining and energy 23 Agriculture 24 Foreign trade and payments Democratic Republic of Congo 26 Political structure 27 Economic structure 27 Annual indicators 28 Quarterly indicators 29 Outlook for 2002-03 32 The political scene 39 Economic policy and the economy 42 Foreign trade and payments List of tables 10 Zambia: international assumptions summary 12 Zambia: forecast summary 32 Democratic Republic of Congo: forecast summary 40 Democratic Republic of Congo: monthly inflation, 2001 41 Democratic Republic of Congo: government revenue, Jan-Jul 2001 EIU Country Report November 2001 © The Economist Intelligence Unit Limited 2001 2 List of figures 13 Zambia: gross domestic product 13 Zambia: kwacha real exchange rates 19 Zambia: 91-day Treasury-bill rate 21 Zambia: annual inflation 22 Zambia: copper cash prices 28 Democratic Republic of Congo: copper price 31 Democratic Republic of Congo: foreign trade 31 Democratic Republic of Congo: gross domestic product 40 Democratic Republic of Congo: exchange rates 2001 40 Democratic Republic of Congo: monthly inflation EIU Country Report 4th quarter 2001 © The Economist Intelligence Unit Limited 2001 3 Summary November 2001 Zambia Outlook for 2002-03 Presidential, legislative and municipal elections are likely to be held in either late November or early December 2001. The presidential candidate of the ruling MMD party, Levy Mwanawasa, will face a strong challenge from Christon Tembo of the FDD opposition party. It is unlikely that the MMD will win an overall majority in the legislative election, but it and the FDD will be well represented in the new parliament. The government’s economic policy priority for 2001-03 is to produce a full poverty reduction strategy paper and then begin to implement it. We have lowered our real GDP growth forecast to 4.3% in 2002 despite increased mining output, because of weak copper demand and prices. Real GDP growth will pick up to 4.6% in 2003 as US recovery and world copper demand strengthens. We expect the kwacha to continue to weaken, to an average of ZK4,389:US$1 in 2002 and ZK5,142:US$1 in 2003. The average inflation rate is expected to fall to 20.5% in 2002 and 17.6% in 2003, mainly owing to higher food output,. The current-account deficit is forecast to narrow from 4% of GDP in 2002 to 2.9% of GDP in 2003, largely as a result of higher revenue from mining exports. The political scene A former vice-president, Levy Mwanawasa, has been named as the MMD’s presidential candidate, and the FDD has chosen another former vice-president, Christon Tembo, as its candidate. But the MMD have questioned his nationality, which could bar him from standing. The opposition parties have failed to agree on a single presidential candidate. The electoral roll was finalised in late September. The MMD’s parliamentary list of candidates has excluded seven ministers, signalling a purge within the MMD of FDD supporters. Economic policy Zambia’s poverty reduction strategy paper has still not been finished, but the World Bank has endorsed the government’s commitment to economic growth, which has led it and the IMF to release funds. Tax revenue has exceeded its target, and monetary policy has been tightened to support the kwacha. The domestic economy The government is optimistic about its real GDP growth and inflation estimates for 2001. However, the kwacha has begun to depreciate. The Konkola Deep mining project has been postponed and Chibuluma South mine has been almost closed, but Mopani Copper Mines has expanded operations. The government has invited tenders for importing maize to meet food shortages. Foreign trade and payments Zambia has introduced non-tariff barriers to restrict the import of some Zimbabwean products. The Angolan rebel group, UNITA, has continued to smuggle diamonds into Zambia. With the apparent delivery of funds from donors, international reserves are believed to have risen to around US$250m. EIU Country Report November 2001 © The Economist Intelligence Unit Limited 2001 4 Democratic Republic of Congo Outlook for 2002-03 The inter-Congolese dialogue will face a testing time in the coming months as efforts are made to keep all the parties involved. Recent obstructiveness toward the dialogue may indicate that hardliners in President Joseph Kabila’s govern- ment are gaining the upper hand. The government’s priority in the dialogue is to win the support of other delegates for President Kabila’s remaining head of state during the transition, which it is seeking to do by offering positions in a future unity government. The government is unlikely to agree to any outcome that does not include its remaining in power. Lack of a mutually agreed timetable for the withdrawal of their troops will remain a key obstacle to the implementation of the peace process by the main foreign parties involved. The government for its part hopes to be seen to be co-operating with efforts to disarm the negative forces, even if recent efforts are lacking in substance. The economic outlook has improved greatly as the government continues with market-based reforms for stabilising the economy. The authorities hope to stabilise real GDP in 2001, and return to positive growth in 2002 for the first time for over a decade. A donor conference in December is expected to result in an enormous increase in assistance for reconstruction. The political scene The inter-Congolese dialogue finally began on October 15th in Ethiopia, although the talks were marred by a government walk-out.
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