THE Government should stop signing contracts in United State (US) dollar to help instill confidence in the Zambian Kwacha, former Commerce, Trade and Industry Minister Felix Mutati has said.
Mr Mutati said it was important for the Ministry of Finance to put in place practical measures that would ensure that all Government contracts were signed for in Kwacha and not in dollar.
He said this in an interview in Lusaka yesterday.
Mr Mutati said that the measure would help alleviate pressure on the local currency.
“The Road Development Agency (RDA) and China Henna International Corporation signed a contract recently to do some roads in dollars and in the meantime the Bank of Zambia (BoZ) had issued a circular that only authorised dealers can deal in dollars that is the commercial banks and bureau de change.
“What this means is that you are undermining the integrity of the Central Bank,” Mr Mutati said.
Mr Mutati said Government could institute measures like coordinated and consistent messaging mechanism on the mining sector and reducing transit time at border posts.
He said the Kwacha was linked to commodity prices and that copper remained the biggest export product.
“So the quick resolution is to sit with the mines at a high level and saying that you are facing this challenge, how can Government and mining sector work together to ensure that we weather the storm and specific pronouncements are made indicating that no mine will close, investment in the mines is going to continue,” he said.
He said the Democratic Republic of Congo (DRC) was one of Zambia’s biggest markets and their mode of trade was cash hence the need for the Government to maximise on that market.
“At the moment there is a maximum cap that you can’t deposit more than US$5,000 because of issues surrounding money laundering but I am sure that we can find a way of addressing those issues and lift the cap of US$5,000. What that will do is increase on the flow of United States dollars,” he said.