UPND leader Hakainde Hichilema has revealed that the PF Government intends to issue a new statutory instrument that will introduce foreign exchange controls.
Mr. Hichilema said the PF government is planning to combine the revoked statutory instruments number 33 and 55 and issue a new statutory instrument number 77 that will restrict the flow of foreign exchange.
‘You know what they are planning to do now, they are planning to introduce exchange controls, going back to what damaged the Kwacha to bring Kwacha to the collapse that it is today, it was S1 33 and 55 and now they want to bring SI 77 or something like that,’ Mr Hichilema said.
He added, ‘This new SI will bring back exchange controls which mean cutting the supply side of dollars in an import dependent economy, it doesn’t support the local currency and it merely damages the local currency.’
‘This damages the local economy and that is why you are seeing the Kwacha has collapsed now because of those controls. So they haven’t stabilised the rate of the exchange unless people are not able to analyse. You will see more pressure as they introduce foreign exchange controls.’
Meanwhile, the Kwacha has slipped back to more than K11, 000 against a single USD.Commercial banks have stopped giving loans because of low cash levels and high interest rates prevailing on the market.
The Bankers Association of Zambia last week warned that key sectors of the country will start getting hurt if the current high interest rates and lack of liquidity in the market is allowed to hold for too long.
BAZ chairman Clergy Simatyaba explained that commercial banks in the country had stopped lending because they did not have cash to lend out.
“That is happening at the moment purely because in order to stabilise the local currency, monetary policy has been tightened and tightening of monetary policy means there is no liquidity in the market,” Simatyaba said. “So if there is no liquidity in the market, I will not just give out a loan. So banks are restructuring their balance sheets and not giving out loans because of the tightening of the monetary policy. Funds have been siphoned out to try and protect the local currency.”
He said surging interest rates in the country made it very difficult for banks to lend.
“The fact that general interest rates in the market have gone up and the Bank of Zambia overnight lending facility is now at 25.5 per cent means before I can consider any client right now for a loan, I must be pretty sure the client is going to pay,” Simatyaba said. “I am not just going to issue a loan because a client wants a loan.”
He said lack of liquidity in the market was likely to stifle growth the longer it was allowed to hold.
“The downside is that economic activity will slow down and that is what the policy is trying to achieve because when there is economic slowdown, then, there is not so much demand for foreign exchange and then it stabilises,” said Simatyaba. “We really wanted the currency to stabilise as a country, so it cannot go for too long because then other sectors start suffering but at least in the short term, you would have stabilised the currency… but banks are not issuing loans at the moment because of the tight liquidity conditions and the high interest rates now prevailing.”
By last month, the kwacha had dropped by 55 per cent this year against the dollar as falling metal prices, a power crisis and widening budget deficit affect the economy badly, resulting to rising inflation of up to 19.5 per cent this year.
In an attempt to contain the historic fall of the kwacha, the Bank of Zambia (BoZ) tightened the monetary policy environment in the country by increasing its benchmark lending policy rate to
15.5 per cent in November from 12.5 per cent, after raising the statutory reserve ratio to 18 per cent earlier in the year from 14 per cent.
The Central Bank wanted to make the kwacha difficult to access so that it stems demand for foreign currency in the domestic market.
But the scarcity of the kwacha at the disposal of the commercial banks to lend out has thrown out some local entrepreneurs and individual customers, who fear that their plans of expanding their businesses or just refinancing their loans has been hurt.
i feel for the PF government. whatever they seem to be doing is being opposed. i dont support them but then what is the solution? they got eurobond and began pouring it and the results are not encouraging. now they want to start controls and HH says thats not the way to go. what then does government do? its a catch 22
Its not difficult to see the solutons – HH has been giving solutions since 2011 including suggestions on diversification, import substitution by promoting local industries, cutting back on reckless borrowing and stopping corruption and fiscal indiscipline.
All this advise it there, BUT PF will not take this advice because their aim is to enrich themselves through dubious road contracts and other deals. We are in trouble @ine wine!
you may wonder what this man has in is head wahtever gvt tries to do hes says it is not possible or it will not work so the only solution will be that he has to be in state house
The problem is that the mines are foreign owned, and are bribing local politicians not to tax them, let alone make sure the benefits of Zambia’s national resources stay in Zambia. So what diversification? Without money made from the mines, there is no money for diversification.
They should let the kwacha fund its true value. You cannot have your major forex earning (copper prodution) sliced from 800 000 tns per year to 440 000 tns per year and still hope to maintain the forex exchange rate. Cut govt expenditure. curtail unnecessary capital projects such as airports and township roads and gradually remove fuel subsidies. Painful : YES! But medicines are are almost always bitter
Say what he wills, even HH can’t change the state of our economy. Such is the crisis we are in. The task that lies ahead, whosoever stands to contest the upcoming elections, either does not have the vaguest idea of the mess they wish to adopt, or they have alterior motives. We are in a mess that only God can fix.
Shortage of forex IS A GLOBAL PHENOMENON!
Who told you??? You think the Dollar is scarce in the USA? Fyani mudala!!
Fota – please do not tell lies — if dollar fyani mu US then why are there a lot of homeless people?
its Global Zuma fired his finance minister, his currency fell so sharply he fired him again
If Lungu had just an inch of BRAINS he would FIRE THE USELESS OLD DINOSAUR Chikwanda.
That would IMMEDIATELY make the Zambian Kwacha rebound!
But that is too difficult for a Jamesoni confused clown to understand.
So this Tonga bull, BOZ Governor didn’t see this coming. You leave a good job at World bank to join a government that has no vision and plan and hope you will manage BOZ properly? Kalyalya was warned that he was gambling with his career he has built so well for so long by accepting a PF job. Every half brained person knows that it was a serious gamble and yet an intellectual didn’t see anything.
Ba DG kumulabasa, pls allow two truck loads of our youths to be filmed denouncing this man. He should be mourning and not revealing classified truths.
Make it headline pa 19 awaz.
Hon Chipuba Kabilibili, BSc ( CopperMountain ), MSc ( Mpatamatu ), MBA ( Loan )
Minister of Neckless Recklesss
iAM HH IWAS CREATED TO OPPOSE ANYTHING.
The curious point is that alarmist HH does not issue a solution to the dilemma being faced by government.
He has been touted as an Economist but am not convinced that apart from just fighting for his sponsors in Joburgh, and himself, he has the interests of poor ZAMBIANS.
The biggest drawback of course is that he leads a party where to be leader one has to belong to a certain tribe. And they don’t ‘ deny it.
KK where Are you,?
KK is around but mute, anyone else to call upon?
Arm chair critic be factual.HH was elected UPND leader by delegates from all nine provinces of Zambia that time.Are you telling me all delegates from nine provinces Tonga.By the way whats wrong for a Tonga to aspire for presidency?
it takes a dull person not to see dat a solution is in HH statement. Dont introduce forex controls but stop giving contracts to non zambians who externalise millions of dollars. Dalo dalo. U same thieves like sunday chanda with forged grade 12 certificate who bark to please your masters for money. Dnt read just comment, even me who has been to secondary school thinks we my head not items in
Mary, when you engage foreign contracts you are looking at money for value and do remember that cheap is always expensive.
HH graduated with silent at UNZA.He can’t give any solution to the govt coz the guy wants to be in state house at any cost.He feels bad if the kwacha appreciates cz he knows no one will vote 4 him accept his tribe.The guy got rich after selling the mines.He graduated with a silent and his family was not rich when he graduated.Where did he get da money?Can he explain how he got rich?oo what u hear are insults from his supporters and himself.HH has failed to tell the nation how he became rich period.He is a messiah of a certain tribe.
@Moscow: This is too shallow thinking, if trully you are OP, investigate and bring HH to book if you are suspicious of how he got rich. Only a few low thinking cadres are still preaching tribal politics, move on and bring something new. Zambia belongs to all citizens regardless of their tribe.
@ MOSCOW
Albert Einstein failed Math’s exam. And?
You are asking for solution from HH and in the same sentence, you imply that he is useless. WOW
At least, he has not be convicted twice for embezzlement!!!
Thats the calibre of our intelligence officers. Police are even worse. Try National Service may be.
Did RB who PF have embraced tell the nation how he got rich.???
Even useless comments are global
HH U SHUD KNOW THAT GOVT GETS ADVICE FROM TECHNICAL PIPO INCLUDING IMF.TO U UNLESS IT WAS DONE BY U THAT IS WHEN IT BECOMES GUD RUBBISH RUNNING GOVT IS TOTALLY DIFFERENT FROM RUNNING A DAILY FARM/ PIGGERY FWAKA
Why would you call HH an alarmist when he has the right to protect the investment he has in this country. Obviously some of you lose very little as compared to people which actually moneys at risk due to poor PF governance.
Last time I heard IMF offered advice on austerity measures to be put in place, most of which HH talked about earlier, did govt agree? then we had Press conference where the Presido parroted the same things over and the very following week we had Prados, Pajeros, Land Cruisers in Luano Valley!! What jokers.
Too much political mediocrity in Zambia, that’s why the nation will take time to develop and most citizen looks malnourished.
FOREX CONTROLS.
Welcome to the U.N.I.P, days of hardship, & Katondo street backdoor Bureau de change.
UNIP, Katondo Stret, forex shortage reloaded……!!!!
The thinking of PF cadres is worrying! That blind loyalty will plunge this country further into ruin!
Let the government work..! Politics of hatred will not solve our problems..! Hh plz change your atitude towards national issues..! You are too negative to inspire the would be voters..! U ve lost my vote already..!
Blind people cannot see, unless they’re told what there. The opposition in Zambia particularly UPND never sees anything good in what the PF is doing, in their small world of regional politics, all they see is negativity. A normal being lives on a balanced diet, and this is what I would encourage HH and his party to do and not seeing wrongs in all that PF does. They wanted the contentious “so called” but the same bill presented for adoption in Parliament last Thursday, they opposed it and voted against. What do you want? Tell us. If you think you’re perfectionists then it’s something else but politics is about making meaningful suggestions and of course being mature. BE SINCERE AND TELL THE NATION THE TRUTH, AND THE TRUTH IS BA HH YOU DONT HAVE A SOLUTION TO THE ECONOMIC SITUATION…
I would normally listen carefully to any economist before I criticise, but with this economic manager, the problem is that his criticism and solutions are too badly tainted with political ambitions that you can only trust him at your own peril.
It’s not that he cannot offer a good solution, it’s just that he is leader of UPMD and wants state house at all costs. And he is supported by people with narrow ethnic interests, as we know from the time thAt he became president of UPMD at that infamous convention in 2005. Their colleagues hold conventions at neutral venues but they hold theirs in a place that leaves their message and intentions without any shade of doubt.
As a result, his solutions are not based on knowledge or principle, but what he thinks will get him the most votes. That is the reasons why you see contradictions in what he says today and what he said yesterday. At one time he promised people that he would introduce windfall tax, and has since backed out. He promised to save mining jobs by bringing back Anglo American, but today he issues statements which don’t even mention Anglo, and no apologies at all. He wanted 50%+1 but today his party votes against it, he wanted running mate but today they develop cold feet and his party votes against it after realising who the running mates will be. On the GBM factor, they have surely been caught napping when not so long they only saw GBM as a gateway to northern votes. Now you see what lack of…
On the GBM factor, they have surely been caught napping when not so long they only saw GBM as a gateway to northern votes. Now you see what lack of principles can do to a party.
Same nature as Mmembe of the Past News, same DNA, no difference at all except their names.
Just watch how many more contradictions he will come up with before the elections.
I would not talk about contradictions and u-turns if I were a PF supporter….that has been the legacy of PF. that is what has destroyed Zambia. Also pleas We are still waiting for the 500 K jobs promised by lungu…
Ba hh nabo. Na artificial intelligence. Kaya!
This really shows how clueless PF is!
The ONE THING that is absolutely guaranteed to devalue the Kwacha completely is exchange controls.
Zimbabwe Dollar style, here we go!
I hate this FOOL anything is bad to him, typical of a free masson.
I hold ten of thousands of dollars in my portfolio. Whilst exchange controls will make me even richer, I oppose them for they will make many Zambians poorer.
Forex CONTROL IS IN EVERY NATION USA,GERMANY,UK ,INDIA,JAPAN ,BOTSWANA ETC U CAN DO BUSSINESS MAKE ALOT OF MONEY BUT THEY WILL NOT ALLOW U TO BANK OUTSIDE THERE COUNTRY. HH HAS THESE OUTSIDE HE KNOWS HE CANNOT BE ALLOWED TO EXTERNALISE PROFITS TO A CERTAIN %.DOING SO MEANS EXPORTING JOBS.ALL THIS MONEY BANKED OUTSIDE MAKES OTHERS EMPLOYED
you guys have the brains.am supprised that all these comments are coming from zambians which simply means zambia is very rich with human resource,unfortunately it has lost all of them since they have gone out of the country mukupweneka sad indeed,now they are just standing aloof giving instructions on how to resucitate the zambian economy awe sure kuti waseka.zambians in diaspora ama rubbish
It is important under the current economic circumstances that the outflow of forex is monitored. It is no secrete that the control free model is being abused by investors. Multi-national retail outlets like Shoprite and Game rapidly repatriate profits outside Zambia to suppliers around the world. These suppliers in turn supply goods not only to Zambia but to all other countries where exporting hard currency is near impossible, not excluding South Africa itself.