By JAMES KUNDA –
THE Bank of Zambia (BoZ) says the country’s economy needs an expanded export base to recover from the current unevenness in the global financial system.
. Kalyalya
BoZ Governor Denny Kalyalya said in a statement yesterday that there was also need for the country to engage in expenditure-reducing and expenditure-switching activities.
The Kwacha has in the last fortnight been on a depreciation trend after having come under pressure from global and economic financial markets.
It has been trading at more than K8 against one US dollar.
Other regional currencies that have experienced depreciation in owe of the global economic meltdown are the South African rand, the Tanzanian shilling, Ugandan shilling and the Ghanaian cedi.
Copper prices have also dropped to US$4,900 per tonne from $6,500 in 2014, with top consumer China’s economic growth slowing down to 6.8 per cent in the first half of 2015.
Dr Kalyalya said the central bank was closely monitoring developments in the global economy and the resultant impact these had on the domestic economy and the Kwacha.
“These developments, apart from underscoring the long overdue need for the diversification of our economy to reduce dependence on copper, provide an opportunity for the country to take practical measures to respond to the challenges of diversification.
“Difficult as the situation is, it is an ideal time to actualise this structural transformation as the movements in the exchange rate are sending clear signals that our economy needs an expanded export base and a reduction in unnecessary imports,” Dr Kalyalya said.
He said the central bank deemed the current monetary policy of 12.5 per cent appropriate while other measures in line with its mandate would be taken to cushion the negative impact of the global economic downturn on Zambia.
Dr Kalyalya was confident that the latest position of the central bank on external and internal economic matters would assist local economic agents and the general public with a better appreciation of the circumstance to avoid taking actions that could compound the situation.
