Zambia Democratic Republic of Congo at a Glance: 2001-02
Total Page:16
File Type:pdf, Size:1020Kb
COUNTRY REPORT Zambia Democratic Republic of Congo At a glance: 2001-02 OVERVIEW The president, Frederick Chiluba, has yet to set a date for the national convention of the ruling party, the Movement for Multiparty Democracy, which will select the party’s presidential candidate for the election around November 2001. The resumption of IMF lending will ensure that the government continues with economic reforms, including improving governance. With an upturn in the mining sector, the economy, in real terms, is forecast to grow by over 4% in 2000, by 5.6% next year and by 6.5% in 2002. The exchange rate will remain volatile, ending 2000 at ZK3,933:US$1. The kwacha is expected to average ZK3,955:US$1 in 2001 and ZK4,589:US$1 in 2002. Helped by rising export receipts, the current account will improve from a deficit of 4.2% of GDP in 2000 and 1.1% of GDP next year, to a surplus of 1.4% of GDP in 2002. Key changes from last month Political outlook • The MMD won all eight of the September by-elections, a severe setback for the hopes of the newly established Republican Party of the ex- environment minister and presidential aspirant, Ben Mwila, in next year’s elections. Economic policy outlook • Completion of the poverty reduction strategy paper next year, which will be based on this year’s interim draft, will help Zambia to reach the HIPC decision point late this year, and will feed into next year’s budget process. Economic forecast • We have raised our real GDP growth forecasts for 2001 and 2002 because of expected higher copper productivity, the result of increasing investment in mining. October 2000 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 conferences and roundtables. 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 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.20) 7499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: http://www.eiu.com Electronic delivery This publication can be viewed by subscribing online at http://store.eiu.com/brdes.html 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 London: Jan Frost Tel: (44.20) 7830 1183 Fax: (44.20) 7830 1023 New York: Dante Cantu Tel: (1.212) 554 0643 Fax: (1.212) 586 1181 Hong Kong: Amy Ha Tel: (852) 2802 7288/2585 3888 Fax: (852) 2802 7720/7638 Copyright © 2000 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 Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK 1 Contents 3 Summary Zambia 5 Political structure 6 Economic structure 6 Annual indicators 7 Quarterly indicators 8 Outlook for 2001-02 8 Political outlook 8 Economic policy outlook 10 Economic forecast 12 The political scene 15 Economic policy 18 The domestic economy 18 Economic trends 20 Mining and energy 22 Agriculture 23 Foreign trade and payments Democratic Republic of Congo 26 Political structure 27 Economic structure 27 Annual indicators 28 Quarterly indicators 29 Outlook for 2001-02 29 Political outlook 31 Economic policy outlook 31 Economic forecast 31 The political scene 38 The domestic economy 38 Economic trends 39 Mining 40 Foreign trade and payments List of tables 10 Zambia: international assumptions summary 11 Zambia: forecast summary 16 Zambia: government finance 18 Zambia: money supply 18 Zambia: quasi-money supply 21 Zambia: operating statistics for Konkola Copper Mines, Apr-Jun 2000 22 Zambia: cereal production 40 Democratic Republic of Congo: external debt © The Economist Intelligence Unit Limited 2000 EIU Country Report October 2000 2 List of figures 7 Zambia: foreign reserves 7 Zambia: copper production & price 12 Zambia: gross domestic product 12 Zambia: kwacha real exchange rates 17 Zambia: money supply 20 Zambia: exchange rate 21 Zambia: copper price 28 Democratic Republic of Congo: copper price 28 Democratic Republic of Congo: foreign trade 31 Democratic Republic of Congo: gross domestic product EIU Country Report October 2000 © The Economist Intelligence Unit Limited 2000 3 Summary October 2000 Zambia Outlook for 2001-02 Although it has still not selected its presidential candidate, based on its September by-election successes, the ruling Movement for Multiparty Democracy is expected to win the presidential and legislative elections due around November 2001. The government’s economic policy for the remainder of this year and for 2001 onwards will mainly be determined by the contents of its interim poverty reduction strategy paper (PRSP), which should help lead to a successful conclusion of debt relief under the heavily indebted poor countries (HIPC) initiative. The privatisation process will continue, but slowly, in the post-election period. Fiscal policy will concentrate on balancing the budget by containing public expenditure. After a period of declining interest rates, monetary policy looks set to tighten over the forecast period. Increased copper production has improved real GDP growth prospects this year and will lead to real GDP growth of 5.6% in 2001 and 6.5% in 2002. Repeated energy tariff increases this year and part of next, will lead to an average rate of inflation of 26.1% in 2001 and 23.4% in 2002. Having fallen in 2000, the value of the kwacha will continue to fall, to an average of ZK3,995:US$1 in 2001 and ZK4,589:US$1 in 2002. The current account will continue to improve: the deficit will fall to 1.1% of GDP in 2001, and there will be a surplus of 1.4% of GDP in 2001. The political scene The Republican Party, led by the former environment minister, Ben Mwila, performed badly in the September by-elections. The results have shown that none of the three main opposition parties has a truly national following. Relations with Angola have remained strained because of the military action in the border region. The controversial State Proceedings (Amendment) Bill has upset civil groups who think it will hamper efforts to promote good govern- ance. Civil groups have formed a coalition to monitor the 2001 elections. Economic policy Work on preparing the PRSP has continued; the government has been required to consult civil society in formulating the paper. However, tension has grown, as the Ministry of Finance has declined to widen the groups’ remit. A new budgeting procedure, piloted by five key ministries, has gathered pace, but critics suggest it may fail as interest groups push for exemptions. The domestic economy Lower copper production since privatisation has reduced overall real GDP growth prospects this year, despite the abundant harvest. However, the new mine owners have committed themselves to making sizeable capital investments over the coming years, which should help output to rise steadily. The kwacha has depreciated strongly against the US dollar since July because of the increased cost of imported oil. Foreign trade and Revenue losses are expected when the Comesa and SADC-SACU free-trade payments agreements come into affect. Revenue from non-traditional exports has fallen. © The Economist Intelligence Unit Limited 2000 EIU Country Report October 2000 4 Democratic Republic of Congo Outlook for 2001-02 Efforts to move the peace process forward will focus on President Laurent Kabila who, for the moment, is seen as the main obstacle to peace because of his rejection of the official mediator and the deployment of a United Nations military observer mission. Pressure for him to compromise will come from the international community and his own allies, Zimbabwe, Namibia and Angola, who are increasingly exasperated by his obstructiveness. Mr Kabila may offer some concessions, although ultimately his interests lie elsewhere than the peace process, which is a threat to his power. There is little prospect of substantive change in the government’s economic policies, which are having a devastating impact on the economy, particularly its granting of a monopoly in the diamond sector. As long as the war carries on, the economy is expected to continue to contract over the 2001-02 outlook period. The political scene President Kabila’s hand-picked new parliament, Assemblée constituante et législative, was inaugurated in Lubumbashi in August, although it has been derided as an irrelevance and a government-controlled rubber-stamp.