THE World Bank has backed President Lungu’s decision not to re-introduce foreign exchange controls as the measure to reduce foreign currency supply in a country and affects imports, thereby impacting negatively on the economy.
World Bank lead economist Cesar Calderon said imposing exchange controls to cushioning the falling Kwacha will affect the economy currently facing external headwinds and domestic challenges.
Mr Calderon, who is also co-author of the World Bank’s new Africa’s Pulse, the twice-yearly analysis of economic trends on the continent, said foreign exchange controls could hurt Zambia’s economy as it is an importing country.
“Foreign exchange controls have not been successful in cushioning currency fluctuations.Venezuela and Nigeria are examples of countries that have imposed foreign exchange controls,” he said during a briefing via video conference from Washington.
Recently, President Lungu assured the country that Government has no intention of reintroducing exchange controls in a quest to cushion the falling local unit.
Mr Calderon observed that the Kwacha has been volatile since last year and this has negatively impacted on the country’s economy.