Copper price slump tilts Zambian economy into crisis
Zambia is seeking help from the International Monetary Fund, after an 18% slump in its currency and the value of its key export commodity – copper – retreated, the International Monetary Fund said Friday.
The "recent steep depreciation of the kwacha is raising inflationary pressures and expansionary fiscal policy has created large budgetary imbalances,” according to a statement, after a visit by an IMF team to the country.
Zambia is Africa’s second biggest copper producer and the red metal accounts for 70% of its export earnings.
The copper has declined more than 9% this year, making servicing of the country’s foreign debt more costly. Copper last traded at $3.06 a pound in New York after a steep slide for the week as worries mount over growth in China, which buys half of all Zambia's copper.
Zambia scrapped restrictions on the use of foreign currencies this year as it tried to halt the slide in its currency. The forex measures were introduced by populist leader Michael Sata after becoming the country's president in 2011.
An IMF delegation will return to the Southern African country in early September to discuss an economic support programme.
Africa's number two gold producer Ghana is facing similar problems to Zambia, but so far the West African nation has resisted IMF assistance.
Image of maintenance crew in Zambia copper mill in 2007 by mm-j