ZAMBIA’s international reserves at the Bank of Zambia (BOZ) have dropped from US$1.4 billion last year to US$900 million as at end of February 2009.
And BOZ governor, Caleb Fundanga, said the central bank has been active on the foreign currency market by selling foreign currency to improve liquidity and help stabilise the local currency.
“Our official reserves currently stand at US $900 million, we know that the commercial banks have in their reserves about US $900 million as well, bringing the total to about US $1.8 billion. The thing is our official reserves as BOZ are US $900 million,” he said.
Dr Fundanga said last month the central bank sold US $53 million on the market.
Dr Fundanga was responding to questions from Journalists in Ndola yesterday where he attended a breakfast meeting between a Finnish business delegation and the Copperbelt business community at Mukuba Hotel organised by the Zambia Development Agency.
He said the bank was active on the market and that mitigating depreciation of the Kwacha would not go along with fixing the exchange rate, because it was bad economic management.
Dr Fundanga said there was some improvement in the exchange rate of the Kwacha against some foreign currencies following the import activities that the country was recording.
He said, “The exchange rate problem is not unique to Zambia, every currency is facing the same problems.”
And Dr Fundanga said that the central bank had no plans to knock off the zeros from the local currency.
Dr Fundanga said the central bank has never announced that it would knock off zeros on the Kwacha following substantial depreciation of the Kwacha.
“Nobody at Bank of Zambia has announced that there is such a plan of knocking off zeros on the local currency,” he said.
He said there was need to have a stable environment if such a thing was to happen.
Dr Fundanga said if an opportunity came, the central bank would announce this, but it would be expensive to go for such an exercise.
Dr Fundanga also said that the country needed to diversify into the agricultural sector to feed the yawning export market that could bring in foreign currency.
[Zambia Daily Mail]
Nimwachuleni nomba.
If you ever wanted evidence of where RB is taking this country, there you have it people. National reserves down from 1.4 billion to 0.9 billion in less that a year. That is a 36 % drop in national reserves. That is very very serious people. We have again starting chewing our children’s future UNIP style. God help us. By end of the year there will be nothing, but IMF debt, DEJUVUE all over again
Are you aware that there is a global downturn going on? Have you seen the latest economic indicators from the UK, USA, Japan, China? What exactly has RB Banda done to destroy the Zambian economy? Global down turn means that people are not buying our goods which means that as a country we earn less money. It is good to analyse issues instead of spouting out ignorant jibberish. What we should be discussing now is how to make all African economies less vulnerable to global downturns which is difficult given the inter connectedness of the global economy.
iwe we are aware!!! but i wish your RB can think like you. . . he has no time to discuss economic issues . . . he is busy wasting time on nchito and the post.
Maybe the Governor has not given as much explanation as to why the reserves have dwindled. Look here, I would agree with Mbala’s explanation but that only comes into play to explain why the reserves are not increasing as he rightfully explained we are selling less internationally. But that is not entirely the explananation. I the Governor’s office could account for that drop, would be very helpful, to the Zambian people, now I know there are issues like petroleum and other imports, but an explanation would be useful to analyse objectively where the funds have gone. This is why there is so much corruption in the Zed because flimsy explanations are given and never detailed accounts.
Hey Mbala boy, we are talking about reserves here and not currency depreciation. Reserves go down when you start using them. RB has been on a spending binge. You think all those private jet trips he makes allover the place are free! Look, If the Kwacha goes south I can’t blame him, but if LPM left some money in the bank and instead of that money growing, it starts going down at the rate it is ..I have a problem sorry. The best I can expect from him in these hard times is at least maintain the level. Why not cut spending than deep hands into the savings account. If BOZ used all the drop more to stabilise the kwacha, that is another matter and is not clear in this story
Papaj, are u aware that one of the most basic principles is ” if all things remain constant”! Your grasp of economic issues is quite questionable. If earnings due the global down turn are falling one wonders were the increase in reserves will come from because part of the expenditure is Vital to keep the economy running. To blindly blame RB for things that are outside his control is quite demeaning to ones intelligence. The BOZ Gov has indicated that they have spent $ 53 m to support the kwacha against FX fluctuations. This allready represents close to 50% of the net decrease in Reserves.
Ya ba… did you hear the point or the punch line? look here… I thought $1.4Billion Minus $900Million is $500Million. Am sorry Natty Dread if you are satisfied with that explanation you are as gullible as anything. What we are arguing is $50Million has been explained, can the governor’s office also account for $447Million. Am sorry if you are happy with that explanation could be the reason why there is so much corruption in the Zed because people like you aren’t going to demand much explanation of the accounts. And am afraid that is how it is now, you watch and see if anyone in the entire country will ask for an explanation. May GOD bless us all!!!
Nice point Mpanga, as for you guys blindly supporting RB’s government explanations , see comment #17. I can’t say it better than he has put it. And I rest my case
Prepare for hard times ahead.
It is good that the central bank has intervened in stabilizing the currency. Any depreciation in the kwacha would have proven to be detrimental for Zambia’s economic figures.
Yes it is very true that the drop in currencies is not unique to Zambia only but is happening everywhere around the world. Just last year, Canada’s dollar was trading at $1.20US to $1Cdn. Today, it is trading at $0.72Cdn to $1US.
I think we must also increase investor confidence in this nation so as to sell bonds on the bond market at a premium which will also help stabilize our currency and bring in more foreign currency. Good work BOZ.
It is true that we need to increase investor confidence but the problem is that those same investors are the ones who are also in problems. Big companies such GM and Sony are facing problems so at the moment even if we gain investor confidence, there is not the money to go round because of the credit crunch. Businesses in the west are suffering because banks are not willing to lend which means that they will be less likely to stump up the money for big capital projects.
Very true. Then what we need is deep SADC economic integration. A few weeks ago, RB made a statement that Malawi must grow enough food to feed Zambia and vice-versa. This statement is a powerful statement especially with all this talk about increasing investment in the agric sector.
What the two countries can do is, each country will be responsible for growing its own maize to satisfy its own demand. Then for other crops, the two countries can specialize in what to grow and sell in each others markets.
Malawi can grow, cassava, wheat, fish
Zambia can grow, groundnuts, rice, beef
The two can then export to each other therefore creating a form of dependency…
cont…
between the two countries and therefore creating employment for each other and improving the economic trends for both countries. Zambia can do the same with its other neighbors creating a form of specialized trade (sell me what I don’t have and I will sell you what you don’t have).
my comment before this one is awaiting moderation so in order for you to understand this comment, you’ll first have to wait for the comment before this one to be approved.
correction on the currency figures there.
last year
$1 Cdn – $1.20 US
this year
$1 Cdn – $0.72 US
if the figures have not changed yet. It should be treading in the 0.70’s.
Now I am lost!
Free-Market-Capitalist,
Keep one currency constant as reference.
$US 1.20 – $Cdn 1.00
$US 1.00 – $Cnd 0.72
???????
Mines are been closed,trucks carrying maize go missing,Cud this be we approaching rapture?Corruption nayo awe sure
By the way, Mama Zoe Congratulations on your marriage.
Sometimes you get a bit of ‘some’ respective comments/responses on this blogg in that mode.
True, only Agriculture and Tourism can stabilize Zambia’s economy
The problem now is that people who have money (Westerners) are not travelling because a high number of them are losing their jobs or are fearful that they will lose their job. A friend of mine who works with a specialist Africa travel agency has lost her job because people and companies are simply not booking. I agree that agriculture is important – atleast if we can grow enough for domestic consumption then we wont have to break into the reserves to buy food from elesewhere.
Mbala Mafia # 2.1
‘Nyama Soya’s’ globe trotting is not budgeted for in many instances and as such money has to be found from somewhere to foot the bill. Remember he is also good at going with a large entourage at the Tax payers expense. Yes, the global economy has shrunk but should our President increase salaries at this time when all other nations are reducing theirs? What mitigations is he putting in place to cushion the economic slump. NIL. The buck stops at him period!!! OK
So you think the president should always stay at home? How will he then attract the investors to come to the country? Should he stop going to all the meetings that directly affect Zambia like the AU and UN? Yes maybe the entourages should be smaller but part and parcel of being a head of state is travel. I agree with what Mpanga ya Mambwe has stated, we need to be given a breakdown as to where and how the money has been spent. Also lets not forget that the reason a country earns money is to actually spend it – it is not always prudent to keep it locked up especially now when many international banks have very small interest rates.
Then why in GOD’s name do we have diplomats and ambassadors… we are doubling our expenses, paying the guys in the foreign mission as well as the president and his ilks who duplicate the work… guys are you serious… have we lost our mables… we might as well retrench the guys in the foreing mission and have RB keep on going on a circus. I mean am not saying he cant just that some trips can be done by guys already in the foreign mission
How do you have the entire president for example going to Malawi and saying to his counter part grow what we don’t have and sell us and we will do likewise… does that make sense to you… can the guy ask the diplomat there to do the job coupled with a phone call by RB to Malawi president
Expect the worst coz by the time our so called constitutional parasites start getting their gratuities …..OOOOOH soup for the Tax payer
There is nothing wrong nor complicated in knocking off zeros from the abnormal kwacha valuation. Honestly why should the Malawian Kwacha carry more weight than the Zambian Kwacha? Malawi GDP is $3.95bn (2008) Per capita $250+. Population 14mil.
Zambia GDP is $12.61bn (2008) Pop 12m. Per capita $1000+. Ghana GDP is $16bn (2008) Pop 23m Per capita $500+. Exchange rate 1 cedi= US 72 cents. Honestly let us just knock off the three zeros from the kwacha and have something like $1=K5.80. Can somebody explain to me why this will be bad.
Mbulawa… the solution to you question, “Honestly why should the Malawian Kwacha carry more weight than the Zambian Kwacha?” is easy… We are more corrupt than Malawi, we are stealing millions of $s as compared to our counterpart. The dollers we are stealing is eating into our reserves, as we are forced to use them in place of the money stollen… So that partly explains why our currency is weaker than Malawi’s. Just look at the Generals you country has incacerated for emblezzlent, am sure you will agree with me that am partly right…
The knocking off of Zeros must first start with a stable currency. First let the BOZ Gov do his work and stabilize the currency then we can talk of knocking off zeros.
The BOZ Gov has done a good job so far. I greatly respect this man.
Economy is not what you think or what you have learnt at school.There are people behide the seen who are manipulating events to achive their desired results.”Global problem require Global solution” is what world leaders are saying,but that is a catch phrase to usher in a global new deal(Novus Ordo Seclorum) Wake up or well come to 1984.
Now i know why i felt like a dark cloud was cast over me when the election results where finally announced and put RB in charge. It was the beginnig of the end!
You honestly think Sata would have single handedly stopped the slide in the copper price whilst at the same time implementing his 100 days building plan? Wonder what the reserves would be like now.
Are you saying Bill Gates has more money than all Zambians put together?
Honestly??? Yes lol
Gate’s assets are accounted for while Zambian assets are not. In that respect, yes he has more wealth than Zambia
FLASH:
MUFULIRA MINE CLOSES IN A MONTHS TIME, AND NKANA A MONTH LATER. GLENCORE DIRECTORS ARE IN A MEETING IN KITWE NOW 1900 hrs ON 05 MARCH
MINISTER OF MONES HON MWALE AND MINES PERM SEC DR BEENE ARE IMPOTENT. DESPITE BEING MINING PROFESSIONALS WITH OVER 25 Yrs EXPERIENCE EACH AND POST GRAD DEGREES FROM THE UK….THEY ARE JUST PUPPETS ON A LONG WORLD BANK STRING!!!!
THEY HAVE THE EXPERIENCE, BUSINESS ACUMEN AND CONTACTS TO ARREST THE DECLINE!!!
To be academically intelligent is one thing to be a thinker is another. Very few men and women on the planet have both.
“MINES” sorry
Michael Jackson is singing again and he’s got a whole lot more than that…
People please do not confuse govt budgeted expenditure with national reserves. Traditionally, the govt never spends money from reserves but spends only money that it obtains as revenue through taxes. The extra that remains from the tax revenue is deposited in BOZ to beef-up national reserves. So, ideally national reserves should either remain the same or increase but NEVER drop. Remember when the govt makes a budget they never use national reserves but use tax revenue. Further, BOZ has not spending money to stabilize the kwacha, rather it has just been exchanging the US$ for Kwacha, implying that every US$ spent is replaced by equivalent kwacha amount. Where is the reserve money going????
This is how mismanagement start, losing money you have not spent.
Very interesting debates going on here. This issue deserves very good analysis because the actual value of international reserves of any country is not easy to assess. I would not be surpried if these very figures were to be corrected tomorrow.
More company closures meaning less revenue for the country from taxation, less exports and less forex income into the country. Zambia with NyamaSoya at the helm will perish. even companies that ccan be bailed out on condition management changed to safegurad the money injected into the compnay is not being done. all NyamaSoya and his minnions are doing is let companies close. 12m Zambians only 300,000 in full time gainful employement. This is a scandle, Zambia will go up in Flames one day. mark my words. Govt., top officials are in Lusaka where things look as if normal.Come to C/belt and other towns.Tthey will fail to contain the fire. Wait!
Why was Musokotwane refusing to give that figure in Parliament when asked about the same? What a chi govt
Because they know they have blown the money in reserves.The last time wanted to trick us that the used a lot of money on Levy’s funeral but stopped short when France said they were going to foot the whole bill. The MMD consists of thieves.
Hi Guys, I’m writing fron Guanzhou. By now you have herd that Chinese investars have bought the mine. We will bring 90 trained Chinese miners to teache Zambians how to mine copper profittably. We hope that we can work harminously for the successful of this mine. I will be rooking ahead to coming to Zambia once my visa is issyued by the govarnment. Rooking foreward to being in nice Zambia. Yours in friendshipe, Weng