DON’T TRIVIALISE BANK RESERVES – KALYALYA
BANK of Zambia (BoZ) Governor Denny Kalyalya says bank reserves should not be trivialised because they affect the country in the event of calamity and other unforeseen circumstances.
And Zambia’s gross domestic product (GDP) is expected to increase following the ongoing rebasing exercise, with experts projecting that this will in turn improve the country’s debt sustainability indicators.
Dr Kalyalya says it is regrettable that some sectors of society are trying to downplay the country’s gross international reserves of US$6.5 billion, which he described as a mandate for any country as enshrined in the Act.
“When you say you can’t eat reserves, yes, literally you can’t eat reserves, but the point is that, whether you like it or not, it affects your life,” he said.
Dr Kalyalya was speaking to journalists at the ongoing 60th Zambia International Trade Fair here yesterday.
He likened the reserve to a period one will survive without getting financial help from anywhere while out of employment.
The central bank governor said Zambia’s import cover now stands at five months, adding that the country can survive for that period without inflow exports.
“Import cover simply means that, if we don’t have inflows by way of exports, we should be able to survive on the reserves that we have accumulated. That’s what it means,” Dr Kalyalya said.
He said with reserves, Zambia stands in a better position to borrow from international lending institutions, who will have confidence in her capital.
“Even at personal level, when you have that reserve, you really think twice before you touch it, but you can use it to borrow from somewhere, that ‘smooth me out, I have a problem, I am expecting money which has delayed’,” Dr Kalyalya said.
Meanwhile, Statistician General Sheila Mudenda said Zambia’s economic fundamentals have changed significantly since the last GDP rebasing exercise, making it necessary to undertake a new exercise.
Ms Mudenda said the country’s economic structure has evolved over time, with new industries emerging and the contribution of existing sectors changing, necessitating updated national accounts.
Ministry of Finance and National Planning economist Tamara Chirwa-Sitali said Government anticipates that the rebasing exercise will increase the size of the economy, resulting in an improved debt-to-GDP ratio.
The projections were shared during a panel discussion organised by the Zambia Statistics Agency (ZamStats) under the theme “GDP rebasing: Why it matters and its implications for Zambia” at the trade fair yesterday.
Zambia Development Agency (ZDA) economist Peter Musangu said the anticipated reduction in the debt-to-GDP ratio will make Zambia more attractive to investors by lowering the risk premium.
Mr Musangu said improved macroeconomic indicators will strengthen Zambia’s investment appeal for both current and potential investors.
BoZ director of economic research Kegan Chisha said timely GDP data is critical for monetary policy formulation and inflation forecasting.
ZDM
