Zambia’s gross international reserves have fallen below US$2 billion for the first time in over a year, triggered by the need to finance the country’s widening current account deficit, Bank of Zambia data reveals.

According to BoZ data, Zambia’s gross international reserves by the end of the first quarter of this year have plummeted to US $1.8 billion, the lowest in the last 12 months.

International reserves are any kind of reserve funds, which central banks can pass among themselves, internationally, and they remain an acceptable form of payment among these banks.

Reserves themselves can either be gold or a specific currency, such as the dollar or euro.

BoZ data shows that Zambia’s reserves by the end of the first quarter of this year hit a 12-month low of US $1.8 billion, representing 2.1 months of import cover, compared to US $2.3 billion in the corresponding period last year, representing 3.2 months of import cover.

According to the BoZ, the sharp decline in the country’s reserves was as a result of the need to finance the country’s widening current account deficit that remains relatively high at US $139.2 million by the end of the first quarter of 2018.

“The current account deficit was financed by a drawdown of gross international reserves, which declined to US $1.8 billion at end-March, representing 2.1 months of import cover, from US $2.1 billion, equivalent to 2.9 months, in December, 2017,” BoZ governor Dr Denny Kalyalya announced in the central bank’s MPC statement.

BoZ data further reveals that Zambia’s gross international reserves have steadily been declining for four successive quarters since last June, with US $2.4 billion by the end of the second quarter of 2017; to US $2.2 billion by end of September; to US $2.1 billion by the end of December last year; and further down to US $1.8 billion by the end of March this year.

Zambia has also maintained huge current account deficits during the last 12-month period under review, with preliminary data indicating that the country recorded US $139.2 million by the end of the first quarter of this year, from US $241.5 million in the fourth quarter of last year.