By Chris Mfula

LUSAKA July 12 (Reuters) – Zambia has cut its economic growth forecast for 2010 to 5.8 percent from 7 percent due to the possibility of a sluggish global economic recovery, Finance Minister Situmbeko Musokotwane said.

The government and Bank of Zambia are also aiming for inflation of 8 percent by the end of the year, Musokotwane said in a letter to the International Monetary Fund seen by Reuters on Monday. Annual inflation stood at 7.8 percent in June, slowing steadily from double-digit rises last year.

Despite the lower economic growth forecast, outlined in the June-dated letter, senior Treasury officials said growth was likely to come in above the new forecast.

“We revised the target downwards because of the global economic crisis but agriculture and mining have performed very well and we expect to grow the economy beyond 5.8 percent,” Likolo Ndalamei, Secretary to the treasury, told Reuters.

In the letter, Musokotwane said growth in Africa’s biggest copper producer would be driven mainly by new investments in mining, power generation, construction and agriculture.

“As agricultural output reverts to trend levels, real GDP growth is expected to fall marginally to 5.8 percent in 2010 before rising to 6 percent thereafter,” Musokotwane said.

“A number of large investments in the mining and energy sectors are expected over the medium-term.”

Musokotwane also said Zambia would start financing talks this year for the 600 megawatt Kafue Gorge Lower power project and the 120 MW Ithezi-Tezhi project. Both are expected to be completed by 2017.

Mines mothballed during last year’s global economic slump have reopened, while tourism may receive a boost in the wake of the soccer World Cup in South Africa.

Musokotwane said domestic revenues were expected to rise to 16.3 percent of GDP due partly to better tax collection and an increase in excise tax on diesel from 7 to 10 percent.

“Downside risks, however, still remain amidst uncertainties about a full-fledged global recovery in 2010 and rising oil prices,” Musokotwane said.

Musokotwane said the government would reduce its spending by 0.9 percentage points of GDP relative to 2009 to allow for more capital spending, which was expected to rise to 4.6 percent of GDP.

“The overall fiscal deficit is expected to remain at 2.5 percent of GDP, and domestic financing is expected to remain as programmed at 1.9 percent of GDP,” he said.

Musokotwane said the government’s spending plans were consistent with a year-end inflation target of 8 percent. (Editing by Ed Cropley)

© Thomson Reuters 2010. All rights reserved.

Copyrights © 2010 Zambian Chronicle. All rights reserved.

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By ZamChro Reporter
Lusaka – Twenty-three journalists honoured for their efforts in protecting press freedom worldwide have urged Zambia’s authorities to overturn the conviction of a newspaper editor in a case linked to a pornography trial for a photo of childbirth, media watchdog the International Press Institute said at the weekend.

In a letter to Zambian President Rupiah Banda, the journalists asked for the conviction of Fred M’membe, editor of the Zambian daily The Post, to be reversed on appeal.

Mr M’membe was sentenced last month to four months in prison with hard labour for publishing an article criticising a trial against a Post colleague charged with “distributing obscene materials” for sending officials a picture of a woman giving birth outside a hospital to highlight the poor state of medical care in Zambia. Sapa-AFP

Copyrights © 2010 Zambian Chronicle. All rights reserved.