President Edgar Lungu has directed that increased fiscal interventions be made to improve Zambia’s existing economic fundamentals.
The directive is meant to ensure that there is favorable foreign exchange liquidity in the Country’s market.
This follows government’s concern over the current developments in the foreign exchange market, where the Kwacha has depreciated sharply against major foreign currencies such as the US dollar.
In a statement made available to Qfm News Special Assistant to the President for press and public relations Amos Chanda has admitted that notwithstanding the adverse global economic developments, the sharp depreciation of the Kwacha is excessive and not consistent with the movements in the fundamental drivers of the exchange rate.
Mr. Chanda says government, through the Bank of Zambia (BoZ), is therefore closely monitoring developments and is taking necessary and appropriate measures.
He notes that the measures are meant to stabilize the exchange rate in order to ensure that it is consistent with the economic fundamentals.
Mr. Chanda states that these measures will be complemented by prudent fiscal management the very reason President Lungu has directed that increased fiscal interventions be undertaken.
He has disclosed that the Governor of the Reserve Bank has since assured the President that various measures are being implemented by the Bank of Zambia.
Mr. Chanda says the Head of State is thus satisfied that the Monetary Policy Committee in consultation with the Ministry of Finance will continue with measured interventions and monitor market trends to ensure the foreign exchange market is normalized.
He has urged the business community and the general public not to panic as government is still commitment to maintaining a liberalized foreign exchange market.
Mr. Chanda says government does not intend to revert to foreign exchange controls to shore up the currency as a measure to cure the speculative distortions.
Mr. Chanda notes that President Lungu thinks that the speculative behavior is therefore unnecessary and that market players are urged to play by the values of a free market economy.