Bank of Zambia Governor Denny Kalyalya says the delay in reaching a conclusion for an aid programme with the International Monetary Fund (IMF) was putting pressure on the kwacha currency.
Zambia and the IMF agreed in October to chart a new path towards debt sustainability after the IMF delayed the conclusion of talks with Zambia, saying it was at high risk of debt distress.
The government had said it hopes to get board approval from the international lender by the end of 2017
“It is more of sentiment because the fundamentals point to continued appreciation,” central bank governor Denny Kalyalya told a media conference.
“One of the factors has been that players were looking to the conclusion of an IMF programme before the end of the year.”
The kwacha currency slid to 10.0850 per dollar on Wednesday from about 9.0000 three months ago and traders said it was due to increased dollar demand and short foreign currency supply
And Dr Kalyalya says containing budget deficit was critical to consolidating macroeconomic stability.
He said the current relatively high fiscal deficit and debt levels have continued to pose risks to macroeconomic stability, hence the need to contain them.
While commending the government for coming up with measures to contain the deficit such as reforming subsidies in the energy and agriculture sectors as paying arrears to dismantle the local debt, the central bank chief noted that further steps were required.
Dr Kalyalya however said preliminary data for September shows that the government’s fiscal deficit and the overall debt was in line with the 2017 budget target of 7 percent.
“The Bank of Zambia will closely monitor domestic and external factor developments and stands ready to implement appropriate measures to maintain price and financial system stability and ultimately support economic diversification and growth,” he said.
He further commended the government over its plans to realign its financing away from external to domestic sources in order to avoid debt distress and achieve debt sustainability, saying this will go a long way in helping contain the deficit.
He noted that the country’s economic outlook remains positive, with figures showing expanded output in key sectors such as mining.
The Central Bank Chief said economic growth prospects were expected to improve over the medium term, with Gross Domestic Product (GDP) for 2017 and 2018 projected at 4.2 percent and 5.0 percent respectively from 3.8 percent recorded last year.
He said this was on account of anticipated expansion in the mining and manufacturing output, complimented by higher production in the agriculture sector as well as recovery in electricity generation.
Meanwhile, the Central Bank has cut its benchmark lending rate by 75 basis points to 10.25 percent citing declining consumer inflation, the high cost of credit and low growth.
The bank said inflation has continued to decline over the last 10 months noting that the cost of credit has been high and growth has been sluggish.
Yes, because you don’t understand. Mukose, mukeibukisha ne mpiya mwaposele ku ma fire tender
I thought the strength of Kwacha is because of the good works done by Mr Jonathan Lungu?
The IMF know that lending to Zambia would only result in the money being stolen by Jonathan and his cronies.
This government has borrowed too much in a short space of time. The problem is that money simply vanishes. No trace. Look what happened to the Euro bond meant to transform Zambia Railways. The same will happen to the money meant for the dual carriage way. If the west or Chinese had morals, or good intentions, they would stop lending money to us. They will end up owning the country if we can’t repay. If you think the lapgreen zamtel scandal is bad, wait until this government is done.
How these thieves are tolerated or even defended is beyond me.
Let us remove these douchebags out of office!!!
I thought the Zambian government has been emphasizing that they are a sovereign state who can’t be blackmailed by the west. You’re asking for money from the same people you’ve been labeling as imperialists.
Exactly my sentiments, laughable really
“Imperialists want to destabilize our sovereign state”….Say that again!
True we have heard a lot of name calling. But here we are again with a begging plate.
I recall last year in IMF representatives African division led by TSIDI TSIKATA and NYBO RASMUSSEN came to Zambia and met ECL in STATES HOUSE, according to the report ( package) subjected to our central bank( BOZ) was somehow better but STRESSES in the sense that Zambian ECONOMY was limping out of touch against MAIN currencies ($,£ and€).some of projections are:to achieve fiscal consolidation, meant to reduce GRZ expenditures,restoring macroeconomic policies especially exchange rates, reductions in inflation and interest rates domestically,better debt public management and fostering market confidence.IMF also required GRZ to implement frontsloaded expenditure cutting and revenue raising measures, strengthening public financial management, to improve monetary policy and etc .The package…
If IFM gives monetary funds to this administration, I think it sends the wrong signal to this well informed generation without representation.
Still waiting for IMF yet the fooooools in Lazy Lungu’s govt are spending money like no man’s business!!
The Kwacha is anyway overrated…..
One minute you say you do not need the IMF, the next minute you say you need them. Come on guys, what the hell is happening! CNP (Chimbwi No Plan). If you need help from the IMF you need fiscal discipline, which currently is not there.
Edigar Lungu should accept conceived Zambian corruption is uncontrollable not to merit any trust from IMF.
We advised PF government under Edigar Lungu that IMF will put tough conditions to access their money beside over indebted Zambian profile on the rankings of IMF. A reasonable move is to tell Zambians the nation does not stand a good chance to borrow from IMF. Alternative sources need to be opted such as reducing non value national expenditure of rampant lavish movements of the head of state as it involves the entire cabinet and support personnel, thousands of man hour wastage on non productive events such as (day of prayer, day of national funerals, day of commemorations and other unnecessary public holidays) all these events translated into monetary terms is huge sums of money as…
Forget this IMF bail out and think of something else. IMF is bad. You just sell this country to poverty. Can’t we do something on our own for once.
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