By Nation Reporter
GOVERNMENT should take advantage of the current appreciation of the Kwacha to schedule repayments on foreign currency-denominated debt and loans, says Policy Monitoring and Research Centre (PMRC) head of monitoring and evaluation Salim Kaunda.
Mr Kaunda said that it was critical that the Government established long-term measures that would sustainably strengthen the currency especially that it was vulnerable to market forces.
“PMRC recommends that Government takes advantage of the current appreciation of the Kwacha to schedule repayments on some foreign currency denominated debt and loans.
“Given that the Kwacha is vulnerable to market forces, particularly those emanating from the mining sector, it is therefore critical that the Government establishes long-term measures that will sustainably strengthen the currency,” he said.
In an interview, Mr Kaunda also said the current positive trading of the Kwacha, which was as a result of steady monetary policy, should be leveraged to attract high capital foreign direct investment (FDI) to key sectors such as energy, agriculture and real estate.
Mr Kaunda said Government must focus on attracting massive investments in the energy sector in light of high demand for electricity in Zambia and the SADC region.
He said Government needed to ensure and maintain macro-economic stabilisation to sustain the current positive trading of the Kwacha.
“The sustained strength of the Kwacha over a period of time would allow the Bank of Zambia to review existing monetary policies for eventual revision in relation to interest rates that will boost private sector participation and increase Zambia’s productive capacity,” he said.
Meanwhile, Mr Kaunda said the recent appreciation of the Kwacha was a positive sign that would instil confidence in the Zambian economy.
“It comes at a time that Zambia’s economy has been grappling with various challenges in the past few years. Amongst these challenges is the volatility of the Kwacha.
“Although the recorded appreciation was generally unpredicted, it is encouraging to note that over the last two weeks the Kwacha has extended a bullish run, trading for a single digit against the dollar,” he said.
He observed that the appreciation had come as a surprise to many stakeholders in the market but however it was as a result of steady monetary policy put in place by the Bank of Zambia.
“The monetary policy has led to the stability of the Kwacha in the last 22 weeks, which has been steady continued. This prudent monetary policy must be coupled by Government’s continued efforts to implement austerity measures,” he said.