Zambia's finance minister, Emmanuel Kasonde, painted a mixed picture of the country's economic prospects in his budget speech to parliament.

He predicted economic growth would shrink, but so too would the budget deficit and inflation.

Warning of food shortages, he set aside 48 billion kwacha ($11.4m) for maize purchases later in the year.

Mr Kasonde did not make any provisions to support the country's major mineral producer, Konkola Copper Mines (KCM) after April, when its parent firm Anglo American plans to pull the plug on funding.

'Determined'

The finance minister predicted this year's budget deficit would be 3%, down from 4.7% in 2001.

"We are determined to reduce the deficit", he pledged. Money from foreign donors had trimmed last year's deficit to 4.7% from the original forecast of 8%, according to official figures.

Real economic growth would be slightly lower this year at 4%, after reaching 5.2% last year, he told parliament.

The growth forecasts assume a recovery for agriculture and ongoing expansion of tourism, Mr Kasonde said.

Inflation is forecast to drop to 13% in 2002 from 18.7% last year, and to dive below 10% from 2003 onwards.

Maize crisis

Crop failure has led to a severe shortage of Zambia's staple food, maize.

Mr Kasonde created a Crop Marketing Authority to buy maize and build up strategic reserves.

Other measures included contracting big farmers to grow maize and providing fertilisers for smallholders.

Bad weather and lack of fertilisers has hurt the current year's maize crop, and output in the 2000/2001 growing season was just over half the 700,000 tonnes the country needs, analysts say.

Tax cuts for miners

Turning to the mining sector, Mr Kasonde said he retained the option to return to parliament if the three mines run by KCM needed a cash injection.

In a boost for small mining firms, he cut the sector's corporate income tax by 10% to 35% and removed a range of other taxes.

The cut brings the rate down the preferential level already enjoyed by Zambia's two biggest mining projects, KCM and Mopani, a venture between Canada's First Quantum and Switzerland's Glencore.

Foreign debt grew to $7.2bn last year from $6.3bn in 2000 after foreign lenders failed to deliver promised debt relief, Mr Kasonde said.