Zambia Holds Key Rate at 2014 Low to Spur Economic Growth

(Bloomberg) -- Zambia’s central bank held its key interest rate at the lowest since 2014 to spur what it terms sluggish economic growth and as it sees price increases remaining within its target range.

The bank maintained the rate at 9.75 percent, Governor Denny Kalyalya told reporters Wednesday in Lusaka, the capital.

Zambia Holds Key Rate at 2014 Low to Spur Economic Growth

The southern African nation that’s the continent’s second-biggest copper producer is shelving projects that aren’t almost complete and will renegotiate loans as it seeks to contain ballooning debt and entice the International Monetary Fund to restart talks on a support package. Inflation accelerated to 7.8 percent in July, hear a two-year high.

Economic growth continues to be “subdued and sluggish,” and the central bank is concerned about high fiscal deficits and rising public debt, the governor said. The economy expanded 4.1 percent last year.

Total government borrowing will probably rise toward 70 percent of gross domestic product at the turn of the decade from about 60 percent currently, Moody’s Investors Service said last month when it cut Zambia’s credit rating by one notch to Caa1, the seventh-highest junk level.

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