Zambian economy slows as power cuts and copper price weigh: minister
LUSAKA, Sept 16 (Reuters) – Zambia’s economy is likely to grow by less than 5 percent in 2015 due to a power crunch that has hit output from mining companies already grappling with a slide in global copper prices, Finance Minister Alexander Chikwanda said. In an interview with Reuters, Chikwanda also said the government was reluctant to acquire more debt due to rising servicing costs, but if necessary would prefer longer-term loans as opposed to short-term IMF money. Africa’s second biggest copper producer has suffered power shortages due to low water levels at its main Kariba hydro plant and also faces reduced exports due to lower metal prices. “The state of the economy is challenging,” said Chikwanda, whose budget a year ago projected growth of 6 percent. “Now GDP by year end could have reduced to something around 5 percent. It might even be slightly below 5 percent.”
While mineral output only contributes 15 percent to Zambia’s budget and less than 10 percent to GDP, it accounts for a lofty 70 percent of export earnings. Mining only employs 60,000 people directly but many more work for firms supplying goods and services, increasing the industry’s importance. “This state of affairs is not very satisfactory. We have to move fast to try and diversify our sources of export earning,” he said, identifying agriculture as the greatest potential. The cash-strapped administration would clamp down on spending to cut the 2016 budget deficit and limit borrowing as external debt servicing costs had risen to 10 percent of the budget.