Finance Minister Dr Bwalya Ng’andu has attributed the depreciation of the Kwacha against the US dollar and other major convertible currencies to low reserves caused by debt servicing and low production and supply in the mining sector.
Dr Ng’andu says the local currency has depreciated by 5.6 percent in November 2019 and by 17 percent on a year on year basis.
He said a sustained depreciation of the currency can lead to inflationary pressure, affect the economic growth of the country, increase the cost of servicing debt and raise the cost of doing business for companies.
Dr Ng’andu said the government has put measures in place both long and medium-term among them tightening the Monetary Policy Rate to help manage the depreciation of the currency.
He also noted the need to increase exports particularly the private sector in order to bring in more foreign exchange which is key in building the reserves.
Dr Ng’andu noted that being an import driven economy, the depreciation of the local currency is expected.
The Finance Minister was responding to Kapiri Mposhi UPND Member of Parliament Stanley Kakubo who asked him what the cause of the rapid depreciation of the Kwacha during the month of November, 2019, is and what urgent measures the Government is taking to stabilize the performance of the Kwacha against other currencies.
Mr Kakubo also asked the Minister what effects the depreciation of the Kwacha has on the economy and what measures the Government is taking to mitigate the adverse effects.