It is for this reason that the Bank of Zambia has all the confidence that today’s consultative meeting will help advance the agenda for the second phase of the FSDP. This forum therefore, brings together the FSDP secretariat, development partners and key stakeholders to discuss the Phase II document and render support, financial and otherwise, to the process as well as facilitate consensus building for the extension of the FSDP to December 2012. During this meeting, the FSDP Secretariat will update stakeholders on the progress to-date as well as outstanding issues and new developments since 2004. The FSDP Secretariat is further expected to highlight some of the key recommendations that were made in the recent Financial Sector Assessment Programme (FSAP) and highlight proposals made by the working groups. 2  BIS Review 131/2009  Furthermore, representatives of Government and cooperating partners will also be at liberty to provide their comments on the programme’s achievements and the policy direction going forward. Finally, it is our view at the Bank of Zambia that the FSDP provides a unique opportunity to enhance contribution of our financial sector to economic growth & poverty reduction as well as deepening and modernising our financial system. However, the ability to move forward will depend on our collective support to achieve the Vision of the FSDP. It is therefore our expectation that this meeting will facilitate consensus among stakeholders on the way forward and update cooperating partners on the need for their continued support of the programme through direct financial support or technical assistance.

Every saver and borrower exerts some influence on the market but naturally not to the same degree. The stage is set by the biggest players, be they individuals, companies or nations. The scope for economic policy Free capital mobility is sometimes criticised for encroaching on democracy and rendering economic policy less effective. Even in a world with integrated financial markets, economic policy is decided by the national political systems. They are free in principle to alter tax rates, boost public spending and adjust interest rates whenever they wish. In this direct sense, a more open economy does not mean that policy is restricted. In many ways, access to international capital can actually enlarge the scope for action. Unlike the case in earlier centuries, a country that is stricken today by severe crop failures, for instance, can borrow external funds to buy seed. Similarly, a country wishing to strengthen its growth potential by more than domestic saving permits can expand its production apparatus more rapidly with the aid of imported capital. At the same time, loans and other financial transactions do entail dependence. If a country’s economic policy does not inspire confidence, the consequences may be unfavourable. Perhaps investors will no longer be prepared to provide new loans and may even stop existing credits. Long bond rates are liable to rise, accompanied by a depreciating currency. Such reactions are the market’s way of passing judgement on economic policy and a country’s creditworthiness. This mechanism is the same as that for private borrowers.