A substantial portion of the revenues from the sale of oil and gas is invested in foreign equities and bonds through the Government Petroleum Fund. As a result, short-term fluctuations in the oil price have less impact on the domestic use of petroleum revenues. In the last 20 years, fluctuations in the terms of trade  3  See for example Tom Bernhardsen and Øistein Røisland. ”Factors that influence the krone exchange rate”, Economic Bulletin no. 3/2000, November 2000. BIS Review 74/2001  5  have been three to four times greater for the Norwegian economy including the petroleum sector than for the mainland economy. The Petroleum Fund thus relieves pressure on the krone exchange rate. Changes in the krone exchange rate may also be due to interest rate changes. Higher interest rates normally make it more attractive to buy NOK-denominated assets and reduce NOK-denominated debt, leading to an appreciation of the krone. In contrast, a decrease in interest rates will normally result in lower demand for the krone and a weaker exchange rate. Experience shows that the interest rate only has this predictable effect on the krone exchange rate when it contributes to stabilising inflation. The exchange rate constitutes an important channel through which monetary policy operates. Changes in the exchange rate are both desirable and intended when they contribute to stabilising inflation. However, fluctuations in the exchange rate can also be a source of economic disturbances.
Caleb M Fundanga: Importance of entrepreneurship in Zambia’s economy Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the PrizeGiving Ceremony for Intermarket Banking Corporation VentureComp 2010 Business Plan Competition, Lusaka, 28 July 2010. *           *  *  Mr Ackim Sinkala, Acting Managing Director – Intermarket Banking Corporation Zambia Limited and Intermarket Securities Limited; Mrs Beatrice Nkanza, General Manager Lusaka Stock Exchange; Dr. Maurice Jangulo, Board Chairman Zambezi Airlines; Dr. Patrick Nkanza, Director General TEVETA; Officials from the Ministry of Science, Technology and Vocational Training; Chief Executive Officers of Financial Institutions and Companies Present; Distinguished Invited Guests; Members of the Press; Ladies and Gentlemen. It is my honour and privilege to officiate at this Prize Giving Ceremony of the VentureComp 2010, K100 Million Business Plan Competition. I was honoured at the beginning of this year to have been given the opportunity to launch this Competition. I did not hesitate to accept the invitation to officiate at this event as the subject of entrepreneurship and the deserved recognition of the entrepreneurial efforts of young men and women is very close to my heart. Distinguished Guests, let me from the onset take this opportunity to commend the sponsors of this competition, Intermarket Banking Corporation Zambia Limited, Intermarket Securities Limited, and their partners, Lusaka Stock exchange (LuSE), Zambezi Airlines and TEVETA for coming up with this excellent and important initiative.