An International Monetary Fund (IMF) team in Zambia to review its economic development and prospects has finished its task with a declaration that the southern African nation's economy looks impressive despite the gloomy world economic outlook, a statement released Tuesday said.
The IMF team led by its Chief of Mission John Wakeman-Linn was in Zambia between Oct. 25 and Nov. 5 in which it held discussions with senior government officials and representatives from the private sector.
According toe IMF Chief of Mission the Zambian economy has so far performed well with real GDP likely to be around 7.3 percent, which he said is impressive in the current uncertain global economic environment.
The IMF chief has however indicated that inflation is likely to exceed this year's target of seven percent due to a rise in food prices but indicated that the inflation rate has so far been under control.
Currently, the country's inflation rate stands at 6.8 percent.
"The mission welcomes the fact that the budget deficit for 2012 is likely to be close to the targeted level of 4.1 percent of GDP. Revenue performance has been better than expected, a result of improved revenue administration," he added.
But the IMF chief expressed concern that total expenditures were larger than budgeted with spending overruns on wages and goods and services partially offset by a shortfall in capital expenditure.
The IMF has also projected that Zambia's economy for 2013 looks good and projected that the economy is likely to grow by eight percent while inflation will be around six percent.
But the IMF has advised the government to keep salaries of public workers in line with the budget, adding that further increases in wages beyond what has been budgeted would make it difficult to finance projects. "There are near-term downside risks for the Zambian economy, arising from the uncertain prospects for the global economy. While the Zambian economy has fared well so far, further deterioration in global economic conditions could squeeze trade deficit lines, reduce demand for Zambian exports and lower copper prices," he said.