Economic Profile of Zambia

For a commodity-based country such as Zambia, policy measures to enhance the efficiency of the agricultural sector is critical for the future. The generally weak outlook for real commodity prices over the long-term make the implementation of policies to increase productivity in agriculture essential. Zambia has recognized the importance of relaxing price controls in agriculture, as well as the importance of liberalizing the marketing and distribution of agricultural products.

The need to divert both earned and donor-provided foreign exchange to the import of food grains slow the revitalization of the Zambian economy in the first-half of the 1990s. Activities required for the revitalization of the Zambian economy included the privatization of enterprises, and the implementation of new IMF/World Bank agreements. The Zambian government is emphatic in its commitment to a market economy.

The policies Zambia is being asked by the IMF and World Bank to reject in the 1990s are the same policies recomm

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ed to ending subsidies, and reform is also threatened by the fragility of Zambian society after decades of Poverty and the impact of AIDS. The Banking and Credit Structure in Zambia The liberalization of foreign exchange and domestic asset markets imposes fiscal costs on governments which are not purchasers of foreign currency from the private sector and not borrowers from the financial system. Fiscal costs increase if liberalization also induces the private sector to reduce domestic money balanced in favor of foreign currency and domestic interest-bearing assets. The substitution out of domestic money reduces seigniorage revenue accruing to government and, unless offsetting fiscal adjustment can be made, will often lead to accelerating inflation. Such outcomes have occurred in recent years in Zambia. The central bank in Zambia is the Bank of Zambia. Both foreign and domestic commercial banks are active in Zambia. Home construction financing is provided primarily by the Zambia National Building Society. The governmental Financial Development Corporation controls all building societies and insurance companies in Zambia. Additionally, the Financial Development Corporation owns one commercial bank in Zambia and holds equi
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Approximate Word count = 2234
Approximate Pages = 9 (250 words per page)

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