Bank of Zambia raises OLF to 22%
The central bank dipped into their tool-box once more to counter the depreciation of the Kwacha - they raised the Overnight Lending Facility (OLF) rate by 4% to 22% and restricted access by commercial banks to ONCE a week. They will also subject local and forex Government deposits to the 14% statutory reserve requirement (this was not done previously). OLF access by commercial banks increased by 293% in Q1 2014 with a cumulative amount of K5.5bn accessed (only K1.4bn in Q4 2013). The moves by BoZ resulted in a 4% appreciation of the Kwacha.
Ministry of Finance & IMF release statement after Article 4 Consultations
An IMF team had been in town since May 26 for Artical 4 consultations with the Ministry of Finance. This culminated in a joint press conference on Friday morning.The big take-away was that 2014 budget deficit is likely to come in at 6.2% of GDP (5.2% with rebased GDP) which is below the forecast of 6.6% of as a result of a number of measures taken by the government which included stabilization of the public sector wage bill. GDP growth was projected to be around 6.5% for 2014.
Bond yields on the two outstanding eurobonds both decreased to below 7%- one can say that yields are a good gauge of global market perception of risk in the Zambian economy. Global players wanted to see if the government had learnt their lesson after last years fiscal issues, which they look to have done. This was also strengthened by the fact that the IMF was part of the process. A ratings upgrade could be warranted should there be further improvement on the fiscal side.
Energy Regulation Board raises retail and commercial tariffs
The Energy Regulation Board (ERB) authorized ZESCO to increase the cost of electricity by 15.38% for commercial users and 25% for domestic consumers effective July 1st 2014. The move follows an upaward adjustment of tarrifs for mining companies by 28.8% in April this year.
Business Insider ranks Zambia 3rd best upstart tourist destination
Business Insider ranked Zambia 3rd out of 50 up and coming tourist destinations over the next 10 years citing strong growth, peaceful ambiance, infrastructure improvement coupled with attractive tourist destinations. Are Zambian entrepreneurs preparing to take advantage of this potential by building more accommodation country-wide, ramping up customer service, improving tourism activities and wrapping up all that in an affordable package? That is the only thing that will keep tourists from all over the world coming and spending their money in this country.
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *