Central bank governor dr Caleb Fundanga has charged that there is need to further cut down the country’s inflation rate if the lending rates are to be reduced.
Speaking in Lusaka along the sidelines of the launch of the cost of doing business 2011, dr fundanga said Zambia’s financial institutions need to do more in ensuring that access to credit was eased for entrepreneurs.
Zambia has been ranked among the top ten global reformers with a ten points improvements in its overall ease of doing business ranking for the local companies in the past year.
The World Bank has however urged the Zambian government to ensure that access to credit is simplified even further so that both the local and foreign entrepreneurs do not have difficulties in accessing it.
And dr fundanga stated that as the inflation rate is coming down, the lending rates will have to be reduced and subsequently help in increasing purchasing power for the ordinary citizens.
Inflation is on a downward trend and fell to 7.3 percent last month, the lowest in 30 years, and by December 2010 end year inflation is projected to be eight percent or even lower.
Government has projected seven percent inflation rate for December 2011.
According to the findings of doing business 2011, Zambia eased business start up by eliminating the minimum capital required and made easier by implementing a one stop border post with Zimbabwe, launching web-based submission of customs declarations, and introducing scanning machines at border post.
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Meanwhile, A committee from the Ministry of Finance and National Planning is today meeting to discuss Zambia’s credit rating which is expected to be kicked started within three weeks.
And GOVERNMENT is later expected to soon sign an agreement with two global rating agencies, Fitch Ratings Limited and Standard and Poor’s (S&P) to provide an independent and prospective credit opinion on Zambia.
Secretary to the Treasury Likolo Ndalamei said government expects within three weeks to conclude with the rating agencies to start their work and further anticipate that the rating will be out by January 2011.
Mr Ndalamei said this in Lusaka yesterday after a press briefing by an International Monetary Fund mission which recently concluded its visit to Zambia.
Mr Ndalamei said Government is discussing the possibility of issuing an international bond and when the matter is concluded, the public will be informed.
He explained that Zambia has maintained macro-economic stability; and the economy has continued to register positive economic growth from 2008.
In 2008, Zambia’s economy grew by 5.7 percent, last year by 6.4 percent while for 2010 and 2011 growth is projected to be 6.6 percent and 6.4 percent respectively.
He said when Zambia is rated; this will enable local companies to mobilize resources abroad cheaply because the lender will know that the country has capacity to pay back.
He said once Zambia is rated, international investors from countries such as the United States of America, United Kingdom can buy the bond and use the money to invest in infrastructure projects.
And JP Morgan, the transaction adviser, has been on board advising Government on the issuance of a sovereign bond and the country’s rating.
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