By BUUMBA CHIMBULU
OPPER price boom will not only provide an opportunity for Zambia to liquidate its debt but give a chance for the country to build a sovereign wealth fund to assist in times of economic turbulence.In addition foreign exchange reserve build shoring up will be given a boost to help cushion the economy against external shocks, says the Kwacha Arbitrageur Magazine.
The largest global commodity trader Trafigura sees copper rallying aggressively to highs of US$15, 000 a tonne as global decarbonisation efforts fuel global deficits.
Goldman Sachs also expects a 12-month rally to US$10, 500 per tonne while Citigroup sees the red metal spiking to US$12, 000 a tonne.
It is for this reason that the Kwacha Arbitrageur Magazine indicated that this provided Zambia an opportunity to liquidate its debt.
The Kwacha Arbitrageur said this also provided a chance for the country to build a sovereign wealth fund to assist in times of economic turbulence. “Zambia’s foreign exchange reserves have plummeted to decade and half lows of US$1.2billion weakening the economies import cover.
“A cxommodity price boom will provide reprieve for foreign exchange reserve accumulation and will buffer currency depreciation hopefully to stabilise exchange rate deprecation,” the Kwacha Arbitrageur said.
The Kwacha Arbitrageur said the prospects were high and outlook positive but inspired that successfully implementation of mining reforms would be key in driving Zambia’s sustainable growth.
Zambia has a series of projects for circa US$2 billion on the cards to include Lubambe and the Kansanshi (S2) initiatives that will increase the nation’s production capacity.
The red metal producer launched an economic recovery plan that will seek to leverage off mining as a sector that could accelerate ‘V’ shaped economic recovery especially post Covid-19 that saw the highest growth erosion in the history as Zambia receded 2.6 percent in 2020.
The Southern African nation nonetheless produced north of 868,000 tonnes of copper last year and will target 900, 000 tonnes this year