Report of the seminar on inflanation in African Countires: Lusaka, Zambia 29 Jan. - Feb. 1979

Abstract

Export Fluctuations - Sharp increases in export earnings if not counteracted by domestic- policy action - such as' the reduction of aggregate demand through taxation and liberalization of imports - tends to be inflationary. If the commodity boom is related to an item that is used or consumed; domestically .and is not accompanied by price control, this can result in cost-push inflation. A significant decline in export receipts creates adjustment problems both in -the budget and in the balance of payments.. Resultant budgetary: deficits tend to lead to inflationary financing while rigid import demand based on previous levels also tends to be inflationary in the face of declining foreign exchange earnings.