The Bank of Zambia has raised the Monetary Policy rate to 9-percent from 8.5 to contain persistent inflationary pressures. BOZ Governor Denny Kalyalya said that the 50 basis point increase is also meant to steer inflation to single digits in 2022 and within the 6 to 8% target range by mid-2023.
Dr. Kalyalya said that the decision is also consistent with the central bank’s move towards the normalization of the monetary policy stance and has since called for effective implementation of fiscal reforms to complement the achievement of low and stable inflation.
Speaking during the quarterly briefing in Lusaka today, Dr. Kalyalya stated that the Monetary Policy Committee was also mindful of progress recorded by the economy which it doesn’t want to disturb and restoration of macro-economic stability which has been e
usive in the past.
He said the committee also considered various economic reforms announced by the new dawn government in next year’s national budget which would be able to get low and stable inflation if fiscal and monetary policies are well implemented.
And Dr. Kalyalya added that much as the global economy has made some recovery, it still remains vulnerable owing to uncertainties on the impact of Covid-19 as some countries have already taken some measures.
Dr. Kalyalya pointed at construction, wholesale and retail trade, education and ICT as major drivers of the economic growth with the latter being supported by Covid which saw many people work from home.
He further expressed concern on the low levels of Covid-19 vaccinations saying it is below 1 million against a 5 million adult population.
Meanwhile, the Governor said energy and agriculture sector reforms are cardinal to help address the current inflation problems because the current fuel prices and electricity tariffs have had adverse effects on the exchange rate.
He also expressed optimism that the sale of maize by the Food Reserve Agency and private players from the last bumper harvest is expected to help moderate increases in prices of food items like mealie meal.
On debt, Dr. Kalyalya said Kwacha denominated credit to the private sector grew by 35-point 9 percent in September year on year compared to 33-point 8-percent in June.
He added that foreign currency denominated credit to the private sector contracted further by 30.8-percent due to conversions to kwacha loans.
The Governor urged government to adhere to domestic financing plans which will contribute to reducing borrowing costs for the private sector and support economic growth.
He expressed hope that securing an IMF funded program will help minimize adverse effects of domestic financing on the credit market and management of external debt to sustainable levels.
Dr. Kalyalya also revealed that Gross international reserves rose to 2.9 billion dollars equivalent to 4.9 months of import cover at end of September from 1.4 billion dollars equivalent to 2.6 months of import cover at end of June.
“…..Dr. Kalyalya also revealed that Gross international reserves rose to 2.9 billion dollars equivalent to 4.9 months of import cover at end of September from 1.4 billion dollars equivalent to 2.6 months of import cover at end of June……”
The effect of running a transparent GRZ based on the rule of law as a guiding principle surrounded by prudent economic decisions………
What will the ordinary Zambian benefit from this increase thing, this only means that more people will go into poverty no building of new houses using borrowed money no new businesses no buying asserts for the poor people because of the fear of paying back through your noses.
This new government everything is only going high and higher up the roof nothing seems to be favouring our people, fuel and electricity will be above the belt to say the least where shall we go any way we vehemently wanted a change here we are things have turned against our hopes .
The rise and fall of UPND….we told you dont mess with IMF……..here we go and HH keeps on wasting tax payers money with his foreign trips…Zambians are already missing Lungu….under UPND you cant have both electricity and rain at the same time…one has to disappear
I was just thinking, hypothetically mind you. Suppose Dr Kalyalya had not been removed by Edgar Lungu, was he going to be chopped like his colleagues by the Mr Hakainde?
Spaka >> 1.
Yes, this is a result of the accounts receivable and projections from PF period that has produced the yield reflected in end of September. Please make an attempt to learn basic economics. The outcome is from the seeds that got incubated while the former Governor was at BOZ that produced this yield, if I can put in simple terms. At point you need to tell the truth and not embarrass yourself every day. UPND will be measured in the phase. – And don’t start insulting me and calling me PF this and that. You guys have brain washed yourselves, the only thing that you believe is that if someone critic HH/UPND, then he is a PF clique.
@Nshilimubemba
High interest rate and the majority of Zambians are struggling…..the 2022 budget is just good on paper but in reality it s a mess….only HH and his rich friends don’t care about high interest rates…..
The ones who voted upnd mulekutika!? Haha enjoy increase in cost of living
Elo lwanya! Uko, new dawn indeed
I said more Zambians will be condemned into poverty, yes indeed into poverty because of the increase in the borrowing interests.
The building industry will suffer our poorer Zambians will not be able borrow money to build houses that will affect the self employment , I mean when I last visited Zambia I found that most of the young men who had barely nothing to do sometimes ago but I found that things had changed , they had started some skilled jobs in the building industry carpenters and other skills and had money and other various skills which kept them cool and vibrant.
Building industry employ more people in this world , carpenters bricklayers, plumbers, electricians , painters, tile fitters window glaciers the jobs are just massive if this industry is promoted and as…
Well spoken Spaka, I see PF cadres wanting to claim credit for something they new dawn government has done. They even want to claim credit for projects initiated by MMD. They lamently failed in 10 years to stear the economy in the right direction but instead enriched themselves, destroyed our democracy and perpetuated caderism and lawlessness.
Hahaha ,clueless kantemba economists and HH haters criticizing steps to reduce inflation.They hate Zambia that much?
@Nshilimubemba
And Zambians now have realized that they were duped by HH…..thats the reason why there’s only less than 10 comments on this topic…and also note that any topic that mentions HH you will be lucky to get even 10 comments….loss of interest and Zambians don’t want to hear anything about HH….and I said it yesterday if elections were held today even Sean Tembo would beat HH…..HH and UPND has become so unpopular just less than 4 months in office
how do you steer the economy by raising the interest rates? how does that benefit the ordinary zambian? these top government officials should be there for the poor zambian and not to benefit them
High interest rates means money taken out from banks in the form of loans becomes more costly as poor Zambians will have to pay back more in terms of interest as lending banks make the required adjustments. It also means that all those who took out loans from banks will take longer to pay back what they borrowed. This is certainly a recipe for the continued impoverishment of the Zambian middle class. Under the UPND, even the little money the poor have will be taken away from them as more money will be given to the rich. I just wonder how HH/UPND will be able to endear themselves to many Zambians struggling economically. If interest rates go up it means even owners of small and medium scale enterprises cannot borrow from commercial banks to expand their businesses.
”Speaking during the quarterly briefing in Lusaka today, Dr. Kalyalya stated that the Monetary Policy Committee was also mindful of progress recorded by the economy which it doesn’t want to disturb and restoration of macro-economic stability which has been elusive in the past.”
This is an extract from the article above from the BOZ quarterly briefing. Check Dr Kalyalya’s statement: ”the Monetary Policy Committee was also mindful of progress recorded by the economy which it doesn’t want to disturb.”
My prayer is that Zambians learn to appreciate the efforts of others. You can’t say the economy recorded progress but you go for those who were in the driving seat during the same progress you are acknowledging. Typical of self-centered human beings. I am sure that if this…
Zambia has so much resources, but it’s poor leadership that caused to be where we are. Why not increase production of copper and other mineral resouces that must benefit Zambians economically? From the sale of minerals is money still being externalised to foreign banks or ther measures in place where payment must be sent back to the country of origin? Last time there was stocking of Gold at Bank of Zambia a resource of high value …Kasenseli Gold mine is now being Manned by ZNS and allegal miners have been chased out what benefits are going to the treasury from such mines? Let’s not hear again that Govt have borrowed from so and so organisation other wise as a country most likely we will shrink back into HIPC.What was borrowed under previous govt and Invested in various projects like…
projects like power generation,Road construction & Toll gates should by now be yielding positive results.Please ordinary Zambians at the moment should not be subjected to other tense measures of belt tightening! They want to enjoy the fruits of mother Zambia.
Everyone wants to be an Economist, Yet they understand Nothing on Monitory Policies. Zambians are so good at passing emotional statements with no Facts. YES increased Interested RATE… “SO WHAT” How many poor Zambians borrow from BANKS? Yes, we want the RICH who borrow and can afford, pay their share to lead the Economy to Greatness and help the Poor by reducing cost of living. Bena KAIZER and your bitter haters. GO BACK TO SCHOOL AND LEARN ON HOW ECONOMIES WORK. YOU Had Chris Mbvunga a drunken fool as BOZ Governor. Are you guys serious??? That Boy has always been a failure. CHECK HIS RECORD.
CHECK EVEN THE US FEDERAL GOVERNMENT? DOES MAKE SUCH MOVES TO STIMULATE THE ECONOMIC GROWTH. PF Cadres are so DULL.