LUSAKA, Nov. 22 (Xinhua) -- Zambia's central bank said on Wednesday that containing budget deficit was critical to consolidating macroeconomic stability.
Bank of Zambia (BoZ) Governor Denny Kalyalya said the current relatively high fiscal deficit and debt levels have continued to pose risks to macroeconomic stability, hence the need to contain them.
While commending the government for coming up with measures to contain the deficit such as reforming subsidies in the energy and agriculture sectors as paying arrears to dismantle the local debt, the central bank chief noted that further steps were required.
He, however, said preliminary data for September shows that the government's fiscal deficit and the overall debt was in line with the 2017 budget target of 7 percent.
"The Bank of Zambia will closely monitor domestic and external factor developments and stands ready to implement appropriate measures to maintain price and financial system stability and ultimately support economic diversification and growth," he told reporters during a press briefing.
He further commended the government over its plans to realign its financing away from external to domestic sources in order to avoid debt distress and achieve debt sustainability, saying this will go a long way in helping contain the deficit.
He noted that the country's economic outlook remains positive, with figures showing expanded output in key sectors such as mining.
According to him, economic growth prospects were expected to improve over the medium term, with Gross Domestic Product (GDP) for 2017 and 2018 projected at 4.2 percent and 5.0 percent respectively from 3.8 percent recorded last year.
This was on account of anticipated expansion in the mining and manufacturing output, complimented by higher production in the agriculture sector as well as recovery in electricity generation.
