Bank of Zambia Governor, Caleb Fundanga has recommended that the Central bank be given a charter that includes the freedom and sufficient scope to pursue price stability.
Mr. Fundanga who observed that economies work better if investment and wage
decisions are not thwarted and confused by high inflation, said that while central
banks may not have goal independence, they should have instrument independence.
The Governor attributed an improvement in the fiscal operations of Government to the
supportive country’s inflation and growth objectives.
Mr. Fundanga was speaking in Livingstone today during the opening of the Symposium
on Central Bank Independence whose theme was “Central Bank Independence: Does it
Hurt the Treasury?” Mr. Fundanga said.
He disclosed that the issue of Central bank independence has taken a degree of
prominence in the region adding that it is one of the core principles underlying the
draft Southern African Development Community (SADC) Model Central Bank Bill which he
said is actively pursued by the Committee of Central Bank Governors in the SADC
region.
However, Mr. Fundanga noted that the independence of the Central bank would affect
the financing of fiscal deficits that Governments in the developing world have to
run and meet from time to time.
“There are arguments that there is a fundamental conflict between independence and
an obligation to finance the budget deficit which often is resolved at the expense
of price stability,” he pointed out.
He urged participants to make use of the forum to outline some of the past
developments and challenges, share experiences, appreciate the political and legal
aspects, and understand advantages of Central bank independence among others central
bankers, government, banks, non-bank financial institutions and the business
community to take Zambia’s financial sector to higher heights.
And former Bank of Zambia Governor, Justin Zulu has said that positive and
consistent macroeconomic reforms have manifested in improved investment environment
in the country.
Mr. Zulu, who is also Investrust Bank chairman said a stable macroeconomic
environment is a precondition for achieving growth and economic development which he
said are necessary factors to effectively reduce poverty.
He called for the consolidation and strengthening of the macroeconomic gains to
ensure that the economy has robust and sustained growth and development.
Mr. Zulu reiterated that making the central bank an agency with the mandate and
staking its reputation to maintain price stability benefits the economy and the
government as it stabilizes the macroeconomic environment.
The two-day symposium has attracted participants from Uganda, United Kingdom,
Netherlands, Mauritius, Tanzania, and Zambia.
