Bank of Zambia
Bank of Zambia

The Bank of Zambia has announced an increase in the Monetary Policy Rate from 10.25% percent to 11.50%.

Grappling with energy poverty and rising inflationary pressure, two day deliberations by the monetary policy committee commenced Monday 18th November into Tuesday with the announcement made by BOZ Governor Dr. Denny Kalyalya today.

The Kwacha has been on a one way traffic losing streak with a year to date depreciation of 17% given rising dollar demand and asset sell off pressure as sentiment wanes.

Zambia’s reserves are at a decade low at just below one and half yards translating to import cover 1.6 months which has incapacitated the central bank from sterilizing the market through offloading dollars.

The adjustment comes barely a week after the Central Bank increased the commercial banks overnight lending rate and for the same reason: curb inflation.

And Economist Chibamba Kanyama says the adjustment is a big adjustment in relative terms.

Mr Kanyama noted that the Bank of Zambia had announced this year it would increase the Monetary Policy Rate again if inflation continued to rise hence the decision was expected.

He said in his assessment, the Bank of Zambia remained faithful to its mandate and has carried out its work well to institute monetary interventions that would help stabilize the economy during the time of uncertainty.

Mr Kanyama however said that this is not a cure to the ongoing economic challenges as the more the Bank of Zambia intervenes in the market, the more things are not well and they need change of strategy.

He said the increasing the Monetary Policy Rate at the time the country is likely to register the lowest GDP growth rate in years, industrial output already affected by load shedding, government facing weak financing options and general liquidity conditions already tight is like continuously massaging a malaria-hit child with a wet cloth without knowing what to do next.

Meanwhile, Mr Kanyama added that the Ministry of Finance statement yesterday following the conclusion of the IMF Staff Visit did not provide much cheer either.

He noted that there is a paragraph in the statement that reveals that government has run out of options about what to do with the economy.

“The statement reads in part, ‘The Government will maintain close contact with the Fund in finding solutions and ensuring that policy interventions are undertaken to address challenges and vulnerabilities that the country is currently facing”, he said.

Mr Kanyama said whereas the BoZ move is aimed at stabilizing investor confidence, the same measures undertaken will have a long term detrimental effect on the economy.

He said the Central Bank has done its part but that part is to provide breathing space for fiscal policy to kick in much more aggressively, expand the size of government revenues, prioritise spending, make austerity an implementable strategy, provide effective leadership across the public sector.

Mr Kanyama said the Minister of Finance needs to have a stronger firm hand on the treasury, get the IMF program on board and get all citizens to understand what is happening and convince them to be ready to pay the full price.

“If we do not pay the price now, it will be harder as we get into 2022. This is one issue that now requires collective effort”, He added.

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25 COMMENTS

  1. Lowest forex reserves ,lowest growth rate and an endless slide of Kwacha exchange rate. Truly PF rule has been a disaster for Zambia.

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    • No one loses sleep in the PF over news items like that. The reason an import cover of at least 3 months is maintained is purely to cover the country in case of emergencies such as the electric power deficit we are now in. We hv struggled to arrange emergency power imports because we are low on foreign currency reserves. Whn reserves were being ran dwn, those who took decisions are still seen as movers and shakers in the PF bcos there’s no such thing as being embarrassed.

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    • Just quote: ” Government facing weak financing options and general liquidity conditions already tight is like continuously massaging a malaria-hit child with a wet cloth without knowing what to do next.”

      “He noted that there is a paragraph in the statement that reveals that government has run out of options about what to do with the economy.”

      If the above is not DOOM and GLOOM then tell me what is. Government is broke and this is the beginning of the issues we used to tell you of not voting in people without a vision. It would even be better for HH to walk away from this mess. Take your money and go and live in paradise and civilisation. Try Hawaii and you could be my neighbour here.

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    • Even lowest football performance. The moment they came into power in 2011, they started chewing on the reserves and when the reserves started dwindling, they went on a counter-productive crusade of unlimited borrowing. A disaster that was forewarned. I hope nothing serious happens to our relationship with South Africa and the Arab countries because we will be deep sewer water

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    • Our reserves are at their lowest but ask Nissan, Toyota and Ford Zambia how their revenue has performed in 2018/19 and they will tell you that govt have been their main customer in buying luxury SUVs which add absolutely no value to our Zambian economy, cost us millions of dollars in maintenance yet only enrich a few who buy those same vehicles after a few years. The fact that very few of you readers see the danger of this is a testament to the fact that we are nation who don’t care about how are finances are misused under the false guise of budget appropriation which in other words is just a legal term to allow these resources to be siphoned.

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  2. For the complainers, we’re low on forex and reserves because Zambians are not Entrepreneurial enough to assist in GDP and economic growth. The Private Sector is another begging bowl ….’give us loans so we can do business!’

    Our poor creaking govt is at breaking point. So what has every citizen done to help uh?

    Seriously, Banks in the West are keeping quiet on a new recession…..worse than the 2008, and 1921..Deutsche Bank plans 18,000 jobs cuts in robot strategy called “Operations 4.0” (,replacing humans with robots!). Elsewhere, in the USA 4 Banks have failed and folded in 2019. Start saving……

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    • How did the MMD manage to sustain such healthy levels of reserves and infrastructural projects without any heavy borrowing? Stop manufacturing poor excuses

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  3. This information is too advanced for the average common Zambian. To them, when they see construction everywhere in Lusaka then all is well. Sadly even the so called educated may not understand because of low Financial literacy levels! Yes, we need good infrastructure but we must go about it smartly! It begs the question why we went for a LOAN when we had an offer of a GRANT! It’s all about ukulya Mwibala! We are in for Debt Slavery both at individual debt level and national debt level! If you have a loan with banks, expect bondage as your repayment period lengthens by a few more years! Good luck bane! Mukose!

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    • Dununa reverse, you thought the morons were joking, they were going to reverse all your gains made in Zed, which they have managed, now the scatter teeth moron still wants to be in power, hasn’t he delivered enough drugs for Finley in our private jet, the ka worst president on earth, what a [email protected]

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  4. WHAT DO YOU EXPECT?
    At the helm is a visionless Corrupt Brute, who confessed he had NO VISION whatsoever, had been barred from practicing as a Lawyer, due to swindling a Widow?
    What do you expect, when this Drunken clown excuse for a President who surrounds himself with Violent Brutes like [email protected]!zer, & Ch!mpy0ngo, & these brutes behave exactly like Idi Amin’s “State Research Bureau” thugs, who knew no bounds, & would even kidnap people opposed to Idi right in front of school gates, whilst the victims children helplessly watch?
    TO THESE G00N’Z THE TREASURY IS JUST “KASAKA KA NDALAMA” TO FATTEN THEMSELVES , & PROVIDE CAMPAIGN FUNDS.
    These M4ggots will leave Zambia in a worse state than [email protected] left Zim, where the Zimbabwean economy now suffers from incurable “economic H.I.V -…

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  5. Iam waiting to hear from our government on this issue particularly how it is being addressed. Also those that always comment on party lines, please react to this news.

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    • Well, they will most likely use the common ‘template response’, Climate Change. Their answers always deflect blame from themselves. They, with a straight face, lie through their teeth that they have done nothing that has caused this problem and many other problems we face. When you cannot acknowledge that you have sh!t the bed, it is impossible to correct the problem that is wrapped in a blanket of denial.
      Right now we are being told that ECL is the best thing for Zambians since sliced bread, that he has done exceptionally well.
      They are lucky as they preside over some of the world’s most “peaceful” people, so there will never be any demonstrat!ons or demand for accountability like we have seen in Lebanon where the people have forced the Goven out. In Zambia, we are ‘good’…

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    • Well, they will most likely use the common ‘template response’, Climate Change. Their answers always deflect blame from themselves. They, with a straight face, lie through their teeth that they have done nothing that has caused this problem and many other problems we face. When you cannot acknowledge that you have sh!t the bed, it is impossible to correct the problem that is wrapped in a blanket of denial.
      Right now we are being told that ECL is the best thing for Zambians since sliced bread, that he has done exceptionally well.
      They are lucky as they preside over some of the world’s most “peaceful” people, so there will never be any demonstrat!ons or demand for accountability like we have seen in Lebanon where the people have forced the Goven out. In Zambia, we are ‘good’…

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  6. This kind of news ain’t news any more ……..this is what is supposed to happen, expected by many of us who have been saying lungu is a corrupt violent thug from chawama , who found himself in plot one because that illiterate old man sata needed a corrupt violent scheming home affairs minister.

    Illitrate panage distributing Sata saw the abilities of lungu of being able to corrupt a whole judiciary and police force for the benifit of PF and had him as home affairs minister…….

    This is how lungu stubbled on the presidency…….corruption, tribalisim, debt, violence by caders are peak levels in Zambia because of lungu….

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  7. In other words things have gone down hill since PF took over. If this is not proof enough to all voters then I dont know what is. You have ears and eyes and a brains! you can see for yourself the damage the PF have done to the economy. The thing is, most african states are young and are not used to change of ruling parties. This was expected as PF had no clue how government works and it was just pante pante trial and error. Let us learn from this and pick people who have brains and logic. OUr party is giving you exactly that. every mp in upnd can be scrutinised and you will see that each one has the capacity to manage their portfolios including any government position. Vote upnd and stop this mess

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  8. When Sata and his PF cohorts were saying more money in your porkets or donchi kubeeba or dununa reverse, this is exactly what they meant. People who had no spirit of discernment but into their lies and now everyone is paying for it. PF was a lie from the beginning and the results are there for everyone to see. Yet some people are still in denial.

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  9. Ati “get all citizens to understand what’s happening & convince them to pay the full price”. Why when the govt is still in denial. They are allergic to advice, so they Shud sort out the mess themselves.

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