05 Feb 2018

Minister of Finance and Economic Development, Mr Kenneth Matambo says the recovery in the global economy is expected to have major impact on the performance of the domestic economy during 2017 and 2018 as it provides a market for exports.

Presenting budget speech for 2018/2019 financial year, Minister Matambo noted that domestic economy registered growth rate of 4.3 per cent in 2016, after contracting by 1.7 per cent in 2015. 

He noted the growth was mainly due to the improved performance of the mining sector because of increased demand for diamonds in the global economy.

The growth was further bolstered by good performance of the non-mining sectors, especially trade, hotels and restaurants; transport and communications; finance and business services.

Minister Matambo noted that the domestic economic outlook remains positive, with growth rates of 4.7 per cent and 5.3 per cent expected in 2017 and 2018 respectively. 

He said the positive outlook for both the mining sector and non-mining sectors underpins these growth forecasts.

Mining sector performance is expected to benefit from the recovery in the global economy, while that of non-mining sectors reflects the impact of government’s interventions in terms of policies and strategies to diversify the country’s sources of growth.   

Regarding balance of payments and foreign exchange reserves, Mr Matambo said preliminary projections of the current account indicate a lower surplus of P16.6 billion in 2017, compared to the revised estimate of P19.9 billion for 2016. 

The lower surplus in 2017 was largely a result of the anticipated decrease of 4.2 per cent in total exports of goods. 

On the other hand, imports were expected to increase by around 5.0 per cent in 2017, mainly due to larger imports of food fuel, chemicals rubber products, as well as of diamonds for aggregation.  

The overall balance of payments is forecast to be a surplus of P297 million in 2017 based on November data, compared to a provisional surplus of P2.8 billion for 2016. 

Meanwhile Minister Matambo noted that the level of foreign exchange reserves decreased by 4.0 per cent from P76.8 billion in December 2016 for P73.7 billion in December 2017. 

At this level, the foreign exchange reserves were equivalent to 16.1 months. ENDS