THE current depreciation of the Kwacha which yesterday closed at K10 to a dollar coupled with Zesco’s severe power deficit being experienced has moved President Edgar Lungu to take a range of interventions including an injection of US$120 million on the market to mitigate the economic battering the country has suffered from.
The presidential interventions are largely aimed at halting the severe bleeding of the Kwacha and implementing the economic diversification policies with the base result of exponentially expanding the country’s economy so that it could become more export oriented than an importing one as has been the tradition for years.
The Head of State has also called for increased investment in the energy sector and announced the transfer of shares from the Ministry of Finance to the Industrial Development Corporation (IDC) which has been given the mandate to raise US$500 million that would be invested in the energy sector and other related infrastructural development.
President Lungu has observed that the depreciation of the kwacha to unreasonable levels had severe cost implications for a country like Zambia and has directed all Government institutions to begin rationalizing and minimize expenditure in all areas that were engendering foreign exchange costs.
President Lungu has been under intense criticism from his political opponents over the adverse depreciation of the Kwacha and the power deficit in the country which has largely been as a result of the erratic rainfall in the region but yesterday, the Head of State said no one person in the country felt the economic anguish Zambians were going through more than he did as the chief executive of the nation.
President Lungu directed the ministries involved in the economic management of the country particularly the Ministry of Finance working together with the Bank of Zambia to closely monitor the situation and keep him constantly appraised.
The Head of State said in his state of the nation address through his special assistant to the President for press and public relations Amos Chanda at State House yesterday that following global economic developments over the past two weeks which have had adverse effects on many emerging and developing economies, Zambia had become vulnerable and the balance of payments position heavily deteriorating.
“Difficult as the situation is, it is an ideal time to actualize economic structural transformation. The movements in the exchange rate are sending clear signals that our economy needs an expanded export base and a reduction in unnecessary imports. In recent days, we have seen acceleration in the depreciation of the Kwacha against the major currencies. The increased volatility appears to be reflecting market panic more than underlying fundamentals. The envisaged interventions are designed to calm the markets and allow fundamental factors to be the main determinants of exchange rate movements, President Lungu said.
On the energy sector, President Lungu spelt out a range of interventions for both medium and long term with the desire to see determined and expedient efforts to promote investment in alternative power schemes with a short gestation period of about six months to a year.
The President said with the transfer of shares from the Ministry of Finance to the Industrial Development Corporation, it was his expectation that the IDC would spearhead the acceleration of investment in the power sector.
Ï now instruct Zesco to quickly identify and contract firms that are offering the lowest cost of generation for solar and which will allow Zesco to earn a profit considering the current retail prices for electricity until Zambia has rebuilt and owned its generation capacity to its actual base load,” the Head of State said.
He said it was regrettable that there were citizens who were having a field day each time the country was experiencing difficulties arising from external factors beyond the country’s control, stating that nobody including Government had magical solutions to the challenges.
President Lungu said the challenges the country were real and unprecedented and should not be reduced to mere political rhetoric.