Publication: Zambia - Country Economic Memorandum : Policies for Growth and Diversification, Volume 1. Main Report
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2004-10-20
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2004-10-20
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In October 1991 Zambia moved to a multiparty democratic system. In the following years, the government implemented a number of policy and structural reforms, liberalizing exchange and interest rates, simplifying the tariff structure, and removing quantitative restrictions on trade, privatizing most state-owned enterprises, and substantially withdrawing from the agriculture sector. Despite these reforms, economic growth has remained lackluster, and poverty and social conditions have worsened. There are however, hopeful signs that increased growth and poverty reduction are within reach in Zambia. The country's economy has long been tied to the copper industry, whose purchasing power has been in decline for decades. But declining copper prices were not the only reasons Zambia's economic performance declined between 1991 and 2002. Excluding the one-time disruption in real sector activity in 1994-95, real GDP grew at an average annual rate of 3 percent during 1991-2002. The report argues that estimates puts its annual long-term growth potential at about 5 percent, implying per capita income growth of 2.5-3.0 percent a year, and, the reason why its potential is not being achieved, lies in several key problems, namely macroeconomic mismanagement, lack of ownership of reform and poor policy implementation, a weak investment climate, lack of good governance, and, the HIV/AIDS pandemic. And further asserts that central to the lack of macroeconomic stability - in particular to the high inflation and real interest rate - is the lack of fiscal control and commitment to fiscal discipline. Zambia's large external and rising domestic debt, combined with budgetary dependence on external financing, has constrained the government's ability to exert monetary control to achieve macroeconomic stability. The financial sector must become more efficient and capable of supporting private investment and growth. Key institutional and policy issues for immediate attention are creating a mechanism to resolve the debt of failed banks and state-owned non-bank financial institutions; upgrading the human and technological resources of financial system regulators and supervisors; improving access to financial services, in particular rural financial services; and, investing in financial system infrastructure to improve market data, and accounting and auditing standards. The report expands on the country's opportunities in the mining sector, particularly copper, but also on its rich reserves of gemstone minerals, as an opportunity for export diversification; in the manufacturing sector, specifically textiles, garments, and processed foods; and, in tourism development.
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“World Bank. 2004. Zambia - Country Economic Memorandum : Policies for Growth and Diversification, Volume 1. Main Report. © World Bank. http://hdl.handle.net/10986/15666 License: CC BY 3.0 IGO.”
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Publication Zambia - Country Economic Memorandum : Policies for Growth and Diversification, Volume 2. Annexes(Washington, DC, 2004-10-20)In October 1991 Zambia moved to a multiparty democratic system. In the following years, the government implemented a number of policy and structural reforms, liberalizing exchange and interest rates, simplifying the tariff structure, and removing quantitative restrictions on trade, privatizing most state-owned enterprises, and substantially withdrawing from the agriculture sector. Despite these reforms, economic growth has remained lackluster, and poverty and social conditions have worsened. There are however, hopeful signs that increased growth and poverty reduction are within reach in Zambia. The country's economy has long been tied to the copper industry, whose purchasing power has been in decline for decades. But declining copper prices were not the only reasons Zambia's economic performance declined between 1991 and 2002. Excluding the one-time disruption in real sector activity in 1994-95, real GDP grew at an average annual rate of 3 percent during 1991-2002. The report argues that estimates puts its annual long-term growth potential at about 5 percent, implying per capita income growth of 2.5-3.0 percent a year, and, the reason why its potential is not being achieved, lies in several key problems, namely macroeconomic mismanagement, lack of ownership of reform and poor policy implementation, a weak investment climate, lack of good governance, and, the HIV/AIDS pandemic. And further asserts that central to the lack of macroeconomic stability - in particular to the high inflation and real interest rate - is the lack of fiscal control and commitment to fiscal discipline. Zambia's large external and rising domestic debt, combined with budgetary dependence on external financing, has constrained the government's ability to exert monetary control to achieve macroeconomic stability. The financial sector must become more efficient and capable of supporting private investment and growth. Key institutional and policy issues for immediate attention are creating a mechanism to resolve the debt of failed banks and state-owned non-bank financial institutions; upgrading the human and technological resources of financial system regulators and supervisors; improving access to financial services, in particular rural financial services; and, investing in financial system infrastructure to improve market data, and accounting and auditing standards. The report expands on the country's opportunities in the mining sector, particularly copper, but also on its rich reserves of gemstone minerals, as an opportunity for export diversification; in the manufacturing sector, specifically textiles, garments, and processed foods; and, in tourism development.Publication Turkey - Country Economic Memorandum : Structural Reforms for Sustainable Growth, Volume 1. 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The broad contours o f the strategy are: To stabilize the government's finances through stronger revenue, and expenditure management instruments and institutions, as well as through debt relief; to re-align sector policies with the most essential country priorities, with a general thrust toward improving targeted, and efficient use of resources in both social and public infrastructure sectors; to revamp the public administration to improve policy implementation and service delivery; and, to secure external financial support. Given the fragile external debt situation and the extent of poverty, priority has to be given to fiscal adjustment and the expenditure reform agenda. 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Unemployment has declined from its peak of almost 21 percent in the mid-1990s, to about 12 percent in 2002. Since 2000, youth and the elderly have been more active in the labor market, while prime age employment is on the rise. Factors explaining the decline in unemployment include: changes in demographics; stronger growth and investment; and, progress in structural reforms. Yet, some substantial problems remain and must be addressed. Migration and commuting between regions are impaired by high transportation costs and underdeveloped housing markets; incomes are low in rural areas nationwide; Latvia's labor force features a skills mismatch; taxes on labor use are relatively high, which includes high contributions to social programs; and, investors have raised concerns on factors that would prevent the development of knowledge-intensive sectors. Convergence to European Union (EU) income levels will take time - Latvia's per capita income stands only at about 33 percent of the EU average in purchasing power standards. The 2000 European Council of Lisbon set ambitious targets for raising employment rates in the EU, though in the short to medium term, implementation of the remaining policy agenda, could help Latvia meet the Lisbon targets. Furthermore, as Latvia becomes a member of the EU in May 2004, and prepares to adopt the euro, its flexible labor market will be key for sustaining macroeconomic performance, and accelerating convergence. 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