BOZ Quarterly Brief - Presentation (Q1 2010)

8/9/2019 BOZ Quarterly Brief - Presentation (Q1 2010)

1/22

1

Bank ofZambia

IRST QUARTER 2010 MEDIA BRIEFINGBY.ALEB M FUNDANGA

GovernorBANK OF ZAMBIA

resented at the Bank of Zambia,3 May 2010


2/22

2

INTRODUCTION

l ;This brief reviews monetary policy outcomes

l Other economic and financial sector;developments in Q1 2010 and

l Concludes with an inflation outlook for Q2.2010

BankofZambia


3/22

3

.0 ONETARY POLICY

Monetary policy focus in Q1 2010

-Macroeconomic stability and achieving end year%.inflation target of 8

By containing growth of liquidity in banking.system within projected path

Bank of

Zambia


4/22

4

.0 INFLATION . % (Annual inflation rose to 10 2 in March 2010 Dec: . %)09 9 9 :mainly due to

Rise (in food prices breakfast and roller

, , ,meal rice millet beef products dried

).kapenta and fresh vegetables Despite a fall in inflation rates for

, ;clothing and recreation medical care and- .furniture and household goods sub groups

Bankof Zambia


5/22

5

2.0 INFLATIONBankofZambia


6/22

6

3.0 MONEY SUPPLY & DOMESTICCREDIT

( ),Broad money M3 comprehensively defined to include, . %foreign currency deposits grew by 5 5 in the

. %first quarter of 2010 up from 4 1 recorded at- .end December 2009

. %Largely due to the 16 4 expansion in net foreign( ), . %.assets NFA with NDA contracting by 0 6

. %On an annual basis M3 growth rose to 14 2 in March

. % , ,from 8 3 in December 2009 with NFA and NDA

. % . %, .rising by 7 1 and 19 3 respectively

BankofZambia


7/22

7

,On a quarterly basis domestic credit growth was. %, ,2 1 during the first quarter of the year

. % , .compared to a contraction of 2 7 in Q4 2009

Credit to Government continued to drive NDA growthwith the Net Claims on Government rising by

. %.17 8

, ,However on an annual basis domestic credit growth. % . %slowed to 9 8 in March 2010 from 15 2 in

.December 2009 This was driven by a decline in

. %.credit growth to the private sector of 13 8

Personal loans continued to account for the highest. % ( . %,share of loans and advances at 27 7 22 1

)fourth quarter 2009 followed by agriculture at. % ( . %, ).20 0 19 3 fourth quarter 2009

3.0 MONEY SUPPLY & DOMESTICCREDIT (cont)

BankofZambia


8/22

8

.0 NTEREST RATES

i e l d R a t e s On G o v e r n m e n t S ec u r i t i e s

The composite yield rate for Treasury bills ended the quarter at. %, . % .3 7 down from 9 5 recorded at the end of 2009

The weighted average yield rate for Government bonds fell to

. %, .10 3 6 0 percentage points lower than the end December 2009.closing rate

The fall in yield rates was due to high levels of liquidity in.the banking sector

o m m e r c i a l B a n k s I n t e r es t R a t e s The weighted average lending base rate and the average lending. % ( . %) . % ( . %),rate hardly changed at 22 5 22 7 and 29 0 29 2

.respectively ,Average savings rate for amounts above K100 000 and 30-day deposit

rate remained . % . %.unchanged at 4 7 and 5 6

BankofZambia


9/22

9

.0 FOREIGN EXCHANGE MARKET

,During the quarter the Kwacha appreciated againstmajor currencies mainly due to the sustained rise

.in copper prices

. %, . % . %The Kwacha appreciated by 0 8 6 8 and 5 3 against, .the US dollar Euro and Pound Sterling Against the

. %.South African rand the Kwacha gained by 1 1

The volume of foreign exchange traded in the market. marginally declined Commercial banks sales to the

. .market decreased to US$850 2 million from US$855 3.million while purchases amounted to US$930 2

, , . .million down from US$1 059 2 million

BankofZambia


10/22

10

.0 FOREIGN EXCHANGE MARKET

BankofZambia


11/22

11

.0 REAL SECTORINDICATORS :Overall performance of the real sector was mixed

,Mining , .copper output at 174 725 12 mt during the% , .quarter was 3 lower than 180 188 17 mt of

. ,copper produced in Q4 of 2009 However the. % , .output was 2 2 higher than 170 948 19 mt

.produced in the first quarter of 2009

. %Cobalt output increased by 3 4 to , .1 960 72 mt, .from 1 896 24 mt in the previous quarter.

Manufacturing, , ,Output of cement beer soft drinks

and milk declined mainly on account of seasonal.factors

,Investment Pledges total investment pledges stood

. .at US $1 4 billion compared to US $452 0 million. ,in the fourth quarter When fully executed

,these pledges are expected to generate 5 943.jobs

Bankof

Zambia


12/22

12

Preliminary data show that Zambia recorded an( )overall balance of payments BoP deficit of US

.$81 4 million during the first quarter of 2010.compared with a surplus of US $18 2 million

.recorded the previous quarter

This was on account of unfavourable performance.in the financial and capital account

7. ( )BALANCE OF PAYMENTS BoP

Bankof

Zambia


13/22

13

.0 ( )ALANCE OF PAYMENTS cont d

,During the quarter under review the capital and.financial account surplus narrowed to US $117 6

.million from US $196 1 million recorded the

.previous quarter This was attributed to a decline in capital transfers

, ,direct investment portfolio investment and.other investments


14/22

14

.0 BALANCE OF PAYMENTS( )ont d ,However merchandise trade surplus improved

.to US $368 5 million in the first quarter.2010 from US $272 2 million recorded in Q4

of 2009 due to an increase in merchandise.exports earnings

, , .Copper export earnings at US $1 274 7, . % , .million were 19 5 higher than US $1 067 1million recorded during the previous:quarter

Reflecting a rise in the realised price of. %copper by 10 8 to US $ , .6 665 59 from US

, . .$6 013 37 per tonne the previous quarter

, ,Similarly copper export volumes increased. %by 7 8 to , .191 229 77 ( )metric tons mt from

, .177 457 68 mt recorded during the last.quarter of 2009

BankofZambia


15/22

15

.0 BALANCE OF PAYMENTS( )ont d

,Similarly cobalt export earnings grew by. % .32 2 to US $78 0 million in the first

.quarter of 2010 from US $59 0 million.realised the previous quarter

. %This was largely a result of the 28 0rise in the realised price to US $ .18 19 per

.pound from US $14 21 per pound recorded the.previous quarter

. %Cobalt export volumes increased by 3 2 to, .1 943 52 mt during the first quarter of 2010from , .1 882 44 ,mt the previous quarter.

BankofZambia


16/22

16

. ( )0 BALANCE OF PAYMENTS cont d

, -During the first quarter of 2010 non traditional( ) . % .exports NTEs declined by 11 0 to US $258 4

.million from the US $290 5 million realised in;the previous quarter

Largely due to a fall in export earnings from, , ,cane sugar burley tobacco cotton lint fresh

, , , ,flowers fruits and vegetables gemstones maizecement and petroleum products

BankofZambia


17/22

17

.0 BALANCE OF PAYMENTS( )ont d

: ( . . ) , able 2 Trade Data in US $ millions f o b Q1 20091 2010

Bankof

Zambia

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1*

Trade Bal -99.0 -12.2

341.9 272.2 368.5

Exports 658.3 899.7 1,321.0 1,416.6 1,611.1

Metals 510.1 691.7 1,015.2 1,126.1 1,352.7

Copper 497.5 666.8 947.8 1067.1 1,274.7

Cobalt12.6 24.9 67.4 59.0 78.0

Non-Metals 148.2 208.0 305.8 290.5 258.4

Imports -757.3 -911.9 -979.1 -1,144.4 -1,242.6


18/22

18

An IMF mission visited Zambia between 18th February

and 2nd :March 2010

The mission reached preliminary agreement withthe Zambian Authorities on the 2010

Macroeconomic framework and structural

;measures l Total disbursed poverty reduction budget

( )support PRBS in the first quarter of 2010.amounted to US $66 3 million against a.projection of US $128 5 million and

l ,Payments to various creditors excluding IMF, . .debt service amounted to US $10 6 million

,All quantitative benchmarks except the unencumbered-international reserves benchmark at end March 2010

.were observed

.0 IMPLEMENTATION OF THE ECONOMICPROGRAMME

Bankof Zambia


19/22

19

The overall financial condition and performance ofthe banking sector was satisfactory in the first

.quarter 2010

The banking sector was adequately capitalized

and the liquidity position remained

;satisfactory There was a modest improvement in the asset

quality and earnings performance compared to.the previous quarter

The overall financial performance and condition of.the NBFIs was rated fair

,Leasing and finance companies MFIs andbureaux de change had adequate regulatory,capital fair asset quality and liquidity.position

.0 DEVELOPMENTS IN FINANCIALSECTORBankof Zambia


20/22

20

The total volume of cheques returned unpaid onaccount of insufficiently funded accounts

% , ( :decreased by 15 to 5 287 cheques Qtr 4 2009, ).6 247 cheques

%The value of these cheques decreased by 16 to

. ( : . ).K39 83 billion Qtr 4 2009 K47 49 billion

he public is reminded that bouncingheques is a criminal offence under the.ational Payment System Act

.0 0 DEVELOPMENTS IN BCPSBankofZambia


21/22

21

The annual inflation rate is expected to slow down,during the second quarter of 2010

largely due to an increase in the supply of fresh food/items with the onset of the 2009 2010 crop harvest

.period

.1 0 INFLATION OUTLOOK FORECOND QUARTER 2010

Bankof Zambia


22/22

22

THANK YOU

Bankof Zambia

BOZ Quarterly Brief - Presentation (Q1 2010)

Documents

Transcript of BOZ Quarterly Brief - Presentation (Q1 2010)