CLICK HERE TO READ Statutory Instruments 55
Finance Minister Alexander Chikwanda has with immediate effect revoked statutory instruments (SIs) number 33 of 2012 and 55 of 2013 in a move to salvage the depreciation trend of the local currency, the Kwacha.
Statutory instrument number 33 banned the quoting and payment of goods and services in foreign currencies locally while SI number 55 empowered the Bank of Zambia to monitor inflows, outflows and international transactions.
Speaking during a media briefing in Lusaka today, Mr. Chikwanda said the move has been necessitated by challenges that have arisen in the implementation of the two instruments.
He said government was in consultation with stakeholders to look at other veritable options to protect and safeguard public interests, adding that there was need to intensify efforts aimed at enhancing Zambians’ participation in the economy.
Mr. Chikwanda stressed that the current depreciation of the local currency does not imply a weakening of the country’s economic fundamentals.
He said the weakening in the Kwacha parity was temporary noting that government will not be tempted into interventions that may just end up affecting the country’s reserves.
H said using foreign currencies from the country’s reserves will only artificially stabilise the exchange rate and make the nation more vulnerable in case of continued volatility.
Mr. Chikwanda said in the long term, the nation needs to increase its resilience to shocks by accelerating the diversification of the economy away from copper dependence to ensure resilience to global financial shocks.
He has since assured the nation that government was firmly in control to drive the economy to greater economic prosperity which he said was only possible if all Zambians were active agents of development.
The nominal exchange rate of the Kwacha to other currencies, particularly the US dollar, has come under pressure and has seen the local unit depreciate by up to 13.6 percent since the fourth quarter of last year.
And, Mr. Chikwanda has reiterated that the country’s current levels of external and domestic debt still remain sustainable below international thresholds of 40 percent and 25 percent of gross domestic product (GDP) respectively.
He disclosed that Zambia’s external debt was currently standing at US$3.2 billion in 2013 or 15 percent of GDP whilst the domestic debt is K19.7 billion or 16.3 percent of GDP.
Mr. Chikwanda said it was important that in the medium term, the country’s debt parameters do not exceed these levels.
Meanwhile, the Finance Minister stressed that the country’s economy has remained strong and stable saying it was still among the ten fastest growing in the world and among four fastest growing in Sub Saharan Africa.
He said Zambia’s economic performance in 2013 was strong and that the real GDP growth preliminary out turn is at 6.4 percent.
Mr. Chikwanda said this means that over the past three years from 2011 when the Patriotic Front (PF) assumed office, the economy has grown at an annual average rate of 6.9 percent.
He stated that the country’s economic diversification away from copper was slowly being attained adding that this can be attested by the positive growth in non-traditional exports which have over the past three years increased by an average of 41.9 percent.
Mr. Chikwanda said for the country to continue on the path of strong growth, it was imperative that the country expands its productive capacity by investing in infrastructure development.