Economy

BoZ Governor Says Kwacha Loss Due To Emergency Power Imports

Bank of Zambia governor Dr Denny Kalyalya has attributed the recent sharp depreciation of the kwacha against the US dollar to the emergency importation of electricity from South Africa to cushion the severe shortages in the country.

And the central bank’s Monetary Policy Committee’s (MPC) has increased the policy rate to 11.50 per cent from 10.25 per cent, an increase of 125 basis points, a move it says will help ease the country’s economy problems.

He told a media briefing today that the kwacha was under severe pressure this month.

“The kwacha came under severe pressure such that it moved quite quickly to K14 per dollar. With constant load-shedding, there was a lot more use of fuel, there continued to be pressure. Then, there was the issue of imports of fertilizer; then, there was this announcement that Zesco would also be importing power. When that came in, it just hastened the pressures that were already in the market,” he explained.

The governor has also said the country’s gross domestic product (GDP) growth for 2019 is expected to be below two per cent.

“If things don’t pick up, we may end the year at less than two per cent, that’s very low. It calls for us to reflect and figure what we may need to do. We can’t continue to do the same thing, we must question our actions. If you look over the past five years, 4.7 per cent, that’s the average, so we are growing below. That should be a concern to all of us,” Dr Kalyalya said.

He also talked about the poor performance of the country’s key economic sectors and further disclosed that domestic credit drastically reduced during the third quarter of 2019 to 10.1 per cent from 20 per cent in June, 2019 because of reduced lending in all sectors.

 “Money supply, with the credit going down, it’s not surprising that money supply didn’t grow because these go hand-in-hand,” Dr Kalyalya said.

He further said if the policy rate was not increased, the country would have been caught up in a situation where “we may have what what we may term as ‘stag inflation’ where we have stagnancy, but inflation is going up, which is a very, very difficult situation to come out of so, we don’t want to get to that”.

“It may seem harsh, but it’s because the conditions are quite tough, and we have to rise up to the occasion to ensure that things don’t spin out of control,” said Dr Kalyalya.

20 Comments

  1. One nayz

    Well spoken Mr governor

    • Leon

      Let’s consult the people who claim to know economics before the country’s economy grinds to a situation beyond human power

  2. Martin

    Waste of money…the rains has started in two months time lake kaliba will be full..why can’t the government use this $27million for other things?? Ba Lungu no bwino bwino ,this man needs some powerful prayers something is wrong with him

    • Iwe na iwe!

      It doesn’t take two months to fill up Kariba and do you know why the lake levels are low in the first place? There is a drought affecting East and Southern Africa so you can’t even be sure it will rain enough to fill the lake

  3. Ks

    Of what benefits is the importation of power wen load shedding is still at its peak?

  4. Mweemba mweendalubi

    Lungu is sick in that empty head but bear

  5. Rubin Tembo

    Chinjeni driver, muchalo. We are going nowhere with changwa.

  6. Bwalya mumbi

    Kalyalya, can only do this much, akantu, ukuseya chagwa, with thi newly bought plane, the economy won’t pick.

  7. Uncle

    I don’t know where we are heading to!

  8. SEE MIND (MWAMPO)

    WE NEED DEPRECIATION THE KWACHA UP 20KWACHA PER $1, SO THAT PF GOVERMENT 2021 WE REMOVE FROM THE OFFICE SMOOTHLY. THEN WILL VOTE
    THE OPPOSITION PARTY !!!

    • Ken

      Mr mwampo iam surprised a person like you wishing further depreciation of a kwacha just for the seck of ECL face the problems to run the country. Hod for bid that is witch craft
      How can you wish dome one fail . Never it is better all those wishing and see ECL fail God take Care of them until time for elections come and witness another swearing of EcL. After wards the should develop BP because of their bitter ness . just give a good advice this is your country. The same happens even though you child performs badly encourage you child to improve. I know HH will one day be the president of zambia but not now not 2021 . mark these words 2021 ECL Will be continue may be HH after 2026.

  9. The seeker

    The kwacha has been in free fall for a long time, this can correctly be attributed to the

  10. Fredrick muzeya

    Let him die we vote fast

  11. Wapya

    Tiyeni nayo

  12. Euro Bond

    The Governor should have been candid enough by stating that austerity measures are not being followed by the executive, especially state house

  13. Monk

    #Ken, don’t be surprised by Mwampo and Fredrick comments, when we say these people are bitter and full hatred you think we talk from nowhere? These people are Satanist.

  14. Razor

    Kwacha depreciation and less hours of loadshedding or kwacha stability and more hours of load shedding. Why should we have to choose one over the other. Why can’t we have both like normal countries that is no load shedding and no depreciation. Something is wrong somewhere.

  15. Joe luneta

    Actually we are facing power challenge because of water, but as we can see this is rain session so very soon we are going to have enough water in lake Kariba,so it’s better that money you use it to reduce things within the country Zambia, such as Millie meal, price is over ript off,I thank you.

  16. Shotokoshi

    Don’t wish bady things to happen Zambia is our nation let us put our hands together to solve our country’s bad economy,lungu is just human being like we are let’s not mom him is our choose one at this time, let’s wait and see what will happen in 2021.

  17. kelly

    The conflict between the country’s own electricity provider and government
    Has caused a disturbance in all sectors of the nation,kwacha is as a result
    Of debt owned abroad,zesco need to come to an agreement with the country
    With its new policies atleast.kwacha is a factor,it wont reduce unless we repay our debt a country so rich with not only minerals but minds we need a new income organisation and a new policy.

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