By NATION REPORTER
THE Patriots for Economic Progress (PeP) is surprised that the Bank of Zambia (BOZ) has kept on increasing the Statutory Reserve Ratio (SRR) and the Monetary Policy Rate (MPR) in a quest to arrest the depreciation of the Kwacha.
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PeP president Sean Tembo has however stated that despite clear evidence that these two interventions are neither effective nor desirable, the Central Bank has continued repeating the same economic remedy that had failed to arrest the runaway Kwacha.
Mr Tembo said the Bank of Zambia had steadily been increasing the Statutory Reserve Ratio (SRR) was from 9 percent at the beginning of 2023 to 11.5 percent in February and 14.5 percent in August before finally hitting 17 percent this month.
He said despite such interventions, the Kwacha had not shown any signs of responding to the huge adjustments of SRR.
“The same has been the case with the Monetary Policy Rate which currently stands at 11 percent after being increased by more than 400 basis points in the course of 2023,” Mr Tembo said.
Mr Tembo said that the most sure and sustainable way to support the Kwacha exchange rate was by government issuing a Statutory Instrument that would compel all mining companies to remit the gross proceeds of mineral sales back to Zambia.
He said currently, only a small fraction of the foreign exchange proceeds from mineral sales was remitted back to Zambia.
“That is the reason we have a balance of payments (BoP) surplus on paper and yet there is a shortage of forex on the market. As Patriots for Economic Progress, we are beginning to doubt the competence of the BOZ Governor Dr. Denny Kalyalya and his staff.”
“They appear to be fixated on implementing wrong forex policies despite ample evidence that those policies do not work, but have a destructive effect on the financial services industry as well as the cost of living. Perhaps it is time to consider a new BOZ Governor. Someone who can formulate and implement progressive forex policies that can produce results,” Mr Tembo said.
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