World Bank upgrades Zambia to low-income country status

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The World Bank has reclassified Zambia as a lower-middle-income low-income country, for the financial year 2023.

This development comes after the deterioration of estimates of Gross National Income (GNI) per capita in Zambia recorded in 2021.

And the government says it has embarked on a path of economic repair, stabilization and transformation that will ensure the country quickly regains lower-middle-income country status in the next assessment.

In a statement, the Minister of Finance and National Planning, Dr Situmbeko Musokotwane, said the new dawn government wanted to turn the situation around.

“Deteriorating gross national income (GNI) per capita estimates recorded in 2021 – using the World Bank Atlas method – resulted in the reclassification of Zambia by the World Bank as a low-income country. from lower-middle-income status, for fiscal year 2023. To reverse the situation, the New Dawn government has embarked on a path of economic repair, stabilization and transformation that will ensure that the country quickly regains lower-middle-income country status at the next review or in the medium term; in line with our long-term vision of becoming a prosperous middle-income nation by 2030,” reads the statement released by his ministry.

Dr Musokotwane noted that the macroeconomic health of the country has become unstable by 2021.

“To give perspective to what happened, in 2006 the people of Zambia laid out their collective understanding, aspiration and determination to become a middle-income country by 2030. This goal was to be achieved through the implementation of five-year development plans, the first of which was the Fifth National Development Plan, which, in effect, was from 2006 to 2010. In line with adherence to the objectives and strategies of the FNDP, the country has achieved the lower middle income status in 2011. Real gross domestic product growth between 2006 and 2011 averaged 8.7%,” he said.

“The objectives of Vision 2030 were to grow the economy at progressively higher rates, from 6% real growth over the period 2006 to 2010, 8% between 2011 and 2015, 9% between 2016 and 2020 and 10 % over the period 2021 to 2030. This would have led to an increase in per capita income and a redistribution of wealth to reduce poverty and inequality. Unfortunately, by 2021 our macroeconomic health had become unstable.

Dr Musokotwane said reclassification by the World Bank was looming given poor economic performance against targets.

“In our Vision 2030, we had further set other goals aimed at achieving prosperity, such as entrenching macroeconomic stability and improving the livelihoods of the people of Zambia through increased access to water. drinking water, education for all and the provision of quality health care for all. The initial growth rate target was exceeded, whereas over 2011-2015, real GDP growth was on average 5.2%, and over the period 2015-2021, real GDP averaged 2.4%, contrary to our aspirations for higher growth. initial impetus to actualize the vision of the Zambian people, so graduation by the World Bank was looming, based on poor economic performance against targets,” he said.

The finance minister said the economic stabilization and governance measures his government had put in place would be vigorously pursued to ensure the World Bank’s assessment is reversed in the coming years.

“We are determined to turn the situation around. For this reason, the New Dawn government, upon taking office in August 2021, pledged to deliver on the vision of the people of Zambia. The objective is to stabilize the economy. So far, the government has succeeded in lowering the inflation rate, stabilizing the exchange rate and controlling the government’s domestic borrowing. In the medium to long term, the government has developed the Eighth National Development Plan (8NDP) in which there are strategies to enhance and foster higher growth focusing on the major sectors of agriculture, agro -industry, mining, manufacturing and tourism,” said Dr Musokotwane.

“Furthermore, the government has embarked on a multi-pronged approach to improve the country’s financial and economic governance. The economic stabilization, growth and governance measures that the government has undertaken will be vigorously pursued to ensure that the World Bank assessment is reversed in the coming years of the new Dawn administration. We remain committed to ensuring that progress is made towards Vision 2030 and to turning our country’s economy around. »

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