Responding to a question from Mayinga UPND member of parliament Robert Lihefu during the Vice-President’s question time, Friday, Vice-President Wina said being an import driven economy, the depreciation of the local currency was expected given the pandemic.
In his question, Lihefu quizzed the Vice-President to state whether or not her government had simply failed to manage the country’s economy.
“Your honour the Vice-President, the rate at which the exchange rate of Dollar to Kwacha is escalating is worrying the Zambian people because most of the commodities are now going up. Your honour, what is causing the free-falling of the Kwacha? Tell us, is it because the PF has failed to manage the economy?” asked Lihefu.
But in her response, Vice-President Wina said the outbreak of Coronavirus had contributed immensely to the depreciation of the Kwacha, especially that it broke out in China which is Zambia’s biggest importer of copper.
“Mr Speaker, there are many local and international factors that influence the stability of the Kwacha, including this coronavirus that is affecting the whole world. China is one of the very strong trading partners of this country and China imports a lot of copper from this country. So if the Chinese economy is not responding to our copper that is produced in this country, definitely there has to be an impact on the Kwacha. Only a few minutes ago, the leader of the opposition [Jack Mwiimbu] alluded to the impact of coronavirus on the economy and social economy as well as the economy of the country not only in Zambia but globally. So Mr Speaker, these are serious matters that honourable members should understand that in Zambia we do not operate isolation. We are connected to the global economy and this definitely has an impact on our local currency,” Vice-President Wina explained.
“But coming back home, the Kwacha has been mainly affected because it is driven mainly by reduced supply of foreign currency from mining companies on one hand. On the other hand, there has been increased demand for importation of petroleum products, electricity… you know very well that in this house, we were informed about the need for Zambia to import electricity from Eskom in South Africa and from Mozambique. Mr Speaker, as well as the Agriculture inputs particularly the fertilizer that we do not produce in this country but we have got to get Kwachas and purchase these items.”
Wina further explained some of the interventions that the Bank of Zambia was putting in place to ensure the local currency stabilized.
“Mr Speaker, under this stress of the Kwacha, the Bank of Zambia is taking some measures so that the Kwacha can stabilize. These measures include; increasing the statutory reserve ratio and shifting compliance of the statutory reserve requirements to daily from weekly. So measures are being taken, and I have said before in the house that we need as a country to be a net exporter instead of being a net importer. Otherwise, our Kwacha will continue to be affected negatively,” and Vice-President Wina.