ALLIANCE for Democracy and Development (ADD) president Charles Milupi says President Edgar Lungu’s decision to appoint a party cadre as Bank of Zambia (BoZ) Governor will sink the country into hyperinflation.
In an interview, Milupi said Christopher Mvunga’s appointment as new BoZ Governor could make it possible for money to be printed because he lacked significant banking sector experience.
“Now, this is what the PF government is faced with; no money in the budget, no money in the economy and yet they want to spend. You have seen what they have been doing with the so-called empowerment and so on. Under those circumstances, what normally happens is government now goes for local borrowing. They have tried to borrow, they have issued government instruments, which we are not seeing fully subscribed, but then the ultimate is the printing of money. Now, to print money, you require a weak, unprofessional governor of the Bank of Zambia at the institution so that it panders to the quims of government. I fear that this is where we are heading and, ultimately, when you have a situation like that, the people that pay the heavy fine are the citizens of this country because we shall embark on a path of hyperinflation, high cost of items, rapidly deteriorating exchange rate of the kwacha. This is where we are headed,” Milupi cautioned.
“Added on to all these difficulties, no IMF (International Monetary Fund) money, locally-generated revenues…we have problems! And then, we have COVID-19, but then we are going into an election in 2021. So, what we call the power of incumbency in most governments is during this time, there will be lots of money to spend to show the people that they are doing something just as a gimmick to attract votes for the following year, this is what normally happens.”
He observed that the manner in which Dr Kalyalya’s dismissal and subsequent replacement was done was a sign that government wanted to intensify control of monetary policy.
“The removal of Dr Denny Kalyalya in the manner that it has been done and the replacement is a clear indication that government, through the President, now wants to have a hand in controlling monetary policy in this country and we see that this is premised on the fact that the economy of the country is performing so badly. That is clearly indicated by the debt portfolio that we have,” he said.
“When you look at that article in the Constitution about the qualification for the governor, it seeks to have in that position, a highly-qualified person in terms of the economy, in terms of banking, in terms of accounting and also integrity and accountability. I shudder to think that the new appointee (Mvunga) is taken to that position, especially fully understanding that he is basically, really, a PF cadre whose desire would be to ensure that the ruling party continues in power, and for them to continue in power, they have got to show that they are spending and that can only come by the way of mismanaging the Bank of Zambia.”
And Milupi hailed Dr Kalyalya for doing his job professionally during his tenure as BoZ governor.
“If you look at the monetary policies of this country, where, really, the economy has not performed very well due to fiscal instability and lack of fiscal space, inability, really, of the government to put in proper fiscal policies, the Bank of Zambia has been a rock in holding together the monetary policy so we do not go into hyperinflation such as what has happened in countries like Zimbabwe. The conditions that set in motion the hyperinflation that we saw and we are seeing in Zimbabwe are exactly the same conditions that are prevailing in the economic arena of Zambia; lack of productivity and so on. So, without the Bank of Zambia under Dr Denny Kalyalya ensuring that monetary policies were adhered to, we would have long plunged into hyperinflation. We do have high inflation, but it’s not yet hyper. So, I think as a nation we must thank him for the professionalism that he displayed in his running of the Bank of Zambia,” said Milupi.