the third quarter of 2010 amounted to us $ 19. 5 million from the world bank. a total of us $ 150. 0 million mining tax revenue was received while the bank of zambia foreign exchange purchases from the market amounted to us $ 70. 0 million. preliminary data indicate that the quantitative performance criteria under the extended credit facility ( ecf ) arrangement were observed as at end - september 2010 and that all structural benchmarks were generally on track. national budget 2011 the minister of finance and national planning announced the 2011 national budget on october 8, 2010. the government maintained its focus on diversifying the economy, increasing productive employment and maintaining a stable macro - economic environment. the key macroeconomic objectives for 2011 are ; to exceed 6 % gdp growth ; to reduce end - year inflation to 7. 0 % ; and to maintain international reserves of at least 4 months of import cover. the growth in gdp for 2011 is premised on the continued strong performance of the agriculture, mining, construction, manufacturing, transport and communications and tourism sectors. inflation outlook for the third quarter of 2010 in the fourth quarter of 2010, annual overall inflation is projected to remain below the end year target of 8. 0 %. this favourable outlook is on account of expected stability in maize prices in view of the bumper harvest in 2010, favourable supply of vegetables and fresh fish during the period and relative stability of the exchange rate of the kwacha against the us dollar for much of the fourth quarter. however, the bank of zambia will continue to monitor developments and undertake appropriate monetary policy actions to ensure that monetary targets are achieved. to contain growth of money supply within the programmed path, bank of zambia will continue to employ open market operations and auctioning of government securities. this is expected to be complemented by prudent fiscal operations. i thank you for your attention. introduction this brief examines monetary policy implementation and its outcomes in the third quarter of 2010. the brief also reviews other economic and financial sector developments. in the conclusion, it provides an inflation outlook for the fourth quarter of 2010. monetary policy the focus of monetary policy during the third quarter of 2010 continued to be the achievement of the end - year annual inflation target of 8. 0 %. consistent with this inflation outturn, annual overall inflation was programmed at 7. 3 % for end - september 2010. to achieve this, the bank of zambia utilised largely open market operations to maintain reserve money within the programmed growth path. this was to be supported by the auctioning of

the zambian government launched the financial sector development plan ( fsdp ) in 2004 to address weaknesses that had been identified in the financial sector. the fsdp is therefore a comprehensive strategy that is aimed at achieving a financial system that is sound, stable and market - based, that would support efficient resource mobilization necessary for economic diversification and sustainable growth. the financial sector weaknesses are being addressed through a public and private sector partnership. the implementation structure is chaired by the secretary to the treasury at ministry of finance and national planning with the secretariat function responsible for the coordination of activities based at the bank of zambia. mr chairman, the goal of the fsdp is to have a financial system that is stable and marketbased in order to support efficient resource mobilization necessary for economic diversification and sustainable growth. a number of reforms have already been undertaken under this plan. for instance, a credit reference bureau has been established and we expect it to be operational in the coming year. in addition, studies have also been taken to comprehend the constraints to broader access financial services. one of the outputs of the fsdp has been a market knowledge study called finscope zambia which is a nationally representative survey of the use of, and demand for, financial services. it provides insights into how consumers source their income and manage their financial lives. this is the first time a survey like this has been conducted in zambia and provides valuable information for players in the financial market. the survey, which was conducted in 2005, notes that very few zambians use the formal financial sector. the report reveals that most zambians prefer to invest in non - financial instruments such as a business, livestock, land or agriculture equipment. mr chairman, the year 2006 marked the eighth consecutive year of positive real growth in output while inflation declined remarkably to single digit level of 8. 2 %. during this period, investment was strong, particularly in the mining, tourism, construction, transport and agricultural sectors. this set a good basis for further favourable economic growth in the medium to long - term. increased private sector investment, particularly in the mining sector, contributed to this growth. mr chairman, ladies and gentlemen, zambia ’ s external position has also shown remarkable improvements with the trade surplus rising to us $ 1, 176. 0 million in 2006 from us $ 10 million in 2005. similarly, the current account deficit as a percent of gdp ( excluding grants ) reduced to 2. 3 % from 11. 8 % during the same period. this outturn was