Zambia's capital and financial account balance improved by 135 percent this year to 552 million US dollars from 235 million dollars in 2004, governor of the country's central bank said in Lusaka Friday.

The governor of the Bank of Zambia Caleb Fundanga attributed the favorable performance of international trade to an improvement in the capital and financial account balance.

Fundanga said in his overview of the southern African country's economy in 2005 that the overall balance narrowed down in 2005 by 21.3 percent to negative 274 million dollars in the year compared to negative 348 million dollars last year.

"The improvement in the capital and financial account resulted from a 24.4 percent growth in the project grants to 306 million dollars in 2005, as well as an 11.7 percent increase in foreign direct investment to 334 million dollars," he said.

He added that increased external capital inflows have partly resulted from the rise in investor and donor confidence following the attainment of the Heavily Indebted Poor Countries (HIPC) completion point.

Fundanga however said the current account deficit widened to 826 million dollars in 2005 from 583 million dollars in 2004 because of the deterioration in the services account to 17.2 percent and the deficit in the income account by 42.7 percent this year alone.

Merchandise imports increased to 2.068 billion dollars while merchandise exports rose to 2.095 billion dollars, he said.

He said non-traditional exports registered a strong growth in 2005 with earnings going up 18 percent.

The governor attributed this growth to a strong performance in barley, tobacco, coffee, copper wire, electrical cables, fresh flowers and vegetables, gemstones, scrap metal, cotton lint, yarn and sugar exports.

However, the cobalt exports recorded a drop to 5,500 tons in 2005 from 6,100 tons in 2004.

A total of 133.4 million dollars was paid to various non- International Monetary Fund (non-IMF) creditors to service the external debt in 2005, according to Fundanga.

Source: Xinhua