The first quarter of 2021 revealed that Zambia’s current account on average hit a record all time high of courtesy in an overview from 1998 till date. With a record all time low being in the 3rd quarter of 2008. Before the third quarter in 2020, the surplus had narrowed to 0.6 billion (3.3% of GDP) from US$(3.75% of GDP) due to the payout earnings of mining shareholders precisely those that are non-residence.
Quarter 1 ‘s Preliminary data indicated the sustenance of a current account surplus in the fourth quarter of 2020, owing to strong balance on goods performance. The balance on goods surplus edged higher by 5.2% to US$1.1billion as growth in exports outpaced imports. This saw a rise in exports by 2.7% to US$ 2.4 billion supported by an average rise in copper high prices and volumes. Trade from non-traditional exports like gold, cobalt experienced a reduction. Merchandise imports rose by 0.5 %. US$ 1.4 billion following an increase in consumer and capital goods offsetting reduction in raw materials and intermediate goods.
In the second quarter the account further expanded by 8% to US$0.8 billion from USD$ 0.7 billion due to net exports. Net exports grew by 11% to US$1.3 billion as copper earnings remained strong amidst a drop in imports. Copper earnings rose by 4.3% to US$1.9 billion driven by higher prices despite the fall in export volumes. Merchandise imports fell by 5.5% to USD$1.2 billion, reflecting a fall in capital goods as economic recovery remained weak.
In the third quarter, Current Account surplus narrowed to US$0.7 billion (15.2% of GDP) from US$0.8 billion (16.8% of GDP) as growth in imports outweighed exports. With imports expanding by 33% to 1.5 billion largely due to a stable exchange rate. Goods exports rose by 14.1% to US$2.7 billion driven by higher copper prices and nontraditional exports from agriculture and manufacturing industries. Gross international reserves rose to 1.4 billion equivalents to (2.6 months of import cover) at the end of June from 1.2 billion (2.11 months of import cover) at the end of March. The end of august saw, international reserves rising further to about 2.9 billion 5.4 months of import cover following the receipt of the IMF special drawing rights SDR937.5 million allocation (1.33 billion) as well as Market purchases, as Bank of Zambia’s net purchases amounted to US$ 152.4 million in July and August.
In the fourth and final quarter of 2021 the current account surplus narrowed as data indicated 0.4 billion (7.6% of GDP) from 0.5 billion in the previous quarter. As imports expanded faster than exports, merchandise imports rose to 1.9 billion piloted by an appreciating kwacha and a pick-up in domestic activity. As goods exports increased by 3.7% due to nontraditional exports such as gemstones, cement and so on. With non-significant changes observed to the reserves from the last quarter.
Before securing a three year IMF programme authorities presented the 2022 national budget. The budget which sees sharp reduction of deficit to 6.7% of GDP from the projected 10.4% and pending plans to reintroduce mining tax breaks.