BY CYNTHIA NKHATA
The Bank of Zambia -BoZ- Monetary Policy Committee has maintained the Monetary Policy Rate at 8.5 percent.
BoZ Governor Christopher Mvunga said the decision was arrived at because of a favorable exchange rate and improved prospects for fiscal consolidation.
He said the committee remained mindful of the subdued economic activity and existing vulnerabilities in the financial system.
Speaking at the media briefing in Lusaka today Mr. Mvunga added that BoZ has however prioritized dismantling of domestic arrears, enhanced revenue collection, securing an IMF programme and achieving a sustainable budget balance.
Mr. Mvunga said Zambia’s economy is this year projected to grow by 1.6-percent and strengthen over the medium term.
He said this is on the backdrop of expected positive performance of sectors like ICT, electricity, public administration and education.
Mr. Mvunga has projected inflation to decelerate faster than was earlier anticipated although it will remain above 6 to 8-percent from the current average of 22 point 6-percent.
He said the projection follows receding of some dominant risks, appreciation of the kwacha, positive sentiments on Zambia’s economy, and prospects of securing an IMF program earlier than previously anticipated among others.
And the Central Bank Chief revealed that demand for government bonds surged with the subscription rate rising to 162.2-percent from 66.3-percent in the first quarter.
He attributed the move to mostly high yield rates and improved investor sentiments following the credit rating upgrading by Fitch in April which further attracted nonresident investors who accounted for about 70-percent of bonds demanded.
Mr. MVUNGA also noted that Gross International Reserves rose to 1.4 billion dollars equivalent to 2.6 months of import cover at the end of June from 1.2 billion at the end of March.
He said the reserves however rose to 2.9-billion dollars equivalent to 5.4 months import cover after the receipt of the 1.3 billion dollar IMF Special Drawing Rights at the end of August.
And BoZ Deputy Governor Administration FRANCIS CHIPIMO said the financial sector has since early this year recorder a rise in demand for cash.
Dr. CHIPIMO however allayed social media reports that the central bank is fighting withdrawals of funds.
