AN ECONOMIST Oliver Saasa has commended Government for offloading US$178 million onto the market to mitigate volatility of the Kwacha against the dollar.
Professor Saasa said Zambia being an import intensive country, the release of the dollar on the market would make imports cheaper as the Kwacha would strengthen against the dollar.
“Coming from a significant stress that the Kwacha is facing against the dollar, the move by Government is much appreciated as it make imports much cheaper especially that Zambia is an intensive import country,” Professor Saasa said.
He said this in an interview yesterday following the Bank of Zambia’s decision to offload US$ 178 million to support relatively low supply of foreign exchange and to moderate volatility of Kwacha.
The Kwacha has been weakening against the dollar for the past one year and was in the past one week trading at K6 per dollar.
Prof Saasa, however, noted that there was need to put in place sustainable measures to strengthen the Kwacha as the current move to offload some foreign currency on the market was only a short term measure and could stress country’s foreign reserve.
“Government has to strengthen its policies which include instilling investor confidence, ensuring tax compliance by the mining sector and political and economic stability.
“We need to deal with the main root cause of the situation, by putting our house in order, that is ensuring investor confidence as well tax compliance by mining houses in the country,” Professor Saasa said.
He said there was a lot of nervousness by investors on the market arising from the instability in the policy direction in the country and the debates surrounding the political arena.
Prof Saasa said investor always look for predictability of polices, which would be sustained at a longer basis and stability in political enviroment.
I’m no economist but he is right on the last points about instability in the policy direction…; predictability of polices, ‘which would be sustained at a longer basis and stability in political environment’. These are the main issues that instil investor confidence.
The issue of offloading foreign currency on the market is just a temporal pain relief as he has so rightly pointed out.
At the rate we are going, I wouldn’t be surprised if those 3 ‘0s’ which were cut from the kwacha due to rebasing come right back soon. Zimbabwe tried the idea of cutting zeros from the dollar currency only for them to crawl back.
It’s all crap, it’s the game of demand and supply. Government should looking at strategies that empower it’s people produce more and that will increase the exports. It is total insanity to spend more than what you are earning, who does that?
Too little, too late.
The slide will continue unabated.
Reason?
Lack of fiscal policy, increased foreign borrowing, moping-up of local liquidity, ever increasing budget deficit, bloated civil service payroll, narrowing foreign reserves, increasing of extra budgetary expense, narrowing of pay-roll………..
Choice is yours.
@142
Exactly what I wanted to say. You have hit the nail on the head.
From experience we know that PF ‘s “DONCHI KUBEBA” policy only allows them to lie about any situation when it gets out of hand. They were warned way before about Kwacha’s depreciation but instead of acknowledging the concern and engaging all the stake holders to find an amicable solution they unleashed childish statements via stupid chella justifying the scourge on facebook.PF the poor finishers never stop to baffle me!
Only UPND and HH will restore all what these PF stooges are busy destroying.
Come 2016 we should all vote for UPND and HH for sensible economic policies, freedoms, fairness and justice and above all , for the speedy enactment of a sound people driven constitution.
Viva UPND and HH! PF…
come 2016 total change
‘He said there was a lot of nervousness by investors on the market arising from the instability in the policy direction in the country and the DEBATES SURROUNDIND THE POLITICAL ARENA.’ Black people are their own worst enemies. This is explained by people trying to take over power by bringing down the current government by whatever means necessary, including economic sabotage. If there is change of government, this cycle will still continue. This is how Africans helped to sell their own people to slave traders instead of uniting and fighting the invaders. Give our own Engineers space to start building this economy.
investor confidence is important but it should not decide the fate of our economy.
We have plenty of good land and good weather to grow all our food. We have all the minerals and materials to build almost anything from tooth picks to aeroplanes. We Have Engineers to do all this and all the data needed is all over and there is no need to re-invent the wheel. All we need is to mobilise the man power and give them goals and targets.
Which engineers? Those in the diaspora or the upcoming ones because the present ones have failed.
Agressive Muntanga. Any Engineer domiciled in Zambia but preferably Zambian.
I note the ‘politeness’: import intensive as opposed to consumer-based. Until we are able to provide for the consumption of other societies we will continue to have a weak hold on the elements that buffet us about.
We need to find ways of ‘owning’ the investor as opposed to providing an economic visa-free transit for their activity.
Oliver, we were told in yesterday’s Watchdog report that the USD178m was being offloaded in batches starting January 2014. This simply means that the forex market has already swallowed it up otherwise the kwacha slide would have been worse than it is today had BOZ not pumped in the USD178m. So the impact has ‘already been felt’ and I am sure it is already over.
What we need as a nation are sustainable and predictable economic policies coupled with strong and determined political leadership. Presently both are seriously missing. You get my point?
Generally global currencies are trembling against the dollar, but the Zambian margins are a little alarming ,Hence the need for strategic LONG TERM planning by Govt e.g ensuring part of proceeds from mineral sales by the mines are retained in the country and promoting traditional &non traditional exports.IT WILL HELP ALOT.
chinyama. I appreciate your sober contribution. However, planning alone will not bring food on the table. As a matter of fact we have been planning for decades now. We need to start working now! The chorus doing rounds that there is no planning is just campaign rhetoric. You should explain in simple language how to ensure mineral sales proceeds remain in the country without the ‘owners’ of the mines complaining.
You should be more worried about copper price which has continued to fall down and hitting its lowest level since January 2010. $178 million is a temp measure and how long will BOZ continue to pump in that $178 m? more debt, more trade deficit, more high prices on commodities and more poverty.
Oliver, please lets be REAL and practical is this nothing we need REAL solutions , also avoid being reactionary, we people to be proactive and also that can Minister have respect for Zambians.
Where was or has he been the last 20years , even his company Apollo was actually nowhere in the business until when he became Minister and his has taken our economy back. Mwanawasa introduced windfalls taxes and made huge reserves misused by RB and Chikwnda , where has the wisdom of Chikwanda now come from.Your days are numbered , we are watching you all. When Bob and Lubinda campaigned used the windfall takes as a message , Sata the Chinese , now Chikwanda is giving all contracts to Chinese and Indians , and all the foreign exchange even what he will put in shall go to China and India .
Talk of practical solutions and who is going to listen to you?
These are the buffoons who, amongst their first “important” actions, was to increase the salaries of chiefs – this is the result of populist politics.