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LUSAKA, May 20 (Reuters) - Zambia’s central bank on Wednesday cut its benchmark lending rate by 225 basis points to 9.25%, in response to economic turmoil from the COVID-19 pandemic.
The bank projected gross domestic product (GDP) would shrink 2.6% in 2020, its first economic contraction in more than 20 years. GDP grew 1.9% in 2019.
“With COVID-19, the already challenged domestic macroeconomic environment has worsened,” bank governor Denny Kalyalya told a media briefing.
“Fiscal pressures are expected to heighten in 2020 as revenue performance is adversely affected by COVID-19, while spending to combat the virus rises.”
Zambia has 832 COVID-19 cases and has recorded 7 deaths.
Before the coronavirus hit Africa’s second largest copper producer, activity was already hampered by power shortages and growing public debt stoking fears of a fiscal crisis. (Reporting by Chris Mfula; Writing by Olivia Kumwenda-Mtambo; Editing by John Stonestreet and Andrew Cawthorne)