WE SHALL wait to hear what scandal the Bank of Zambia governor was involved in, which necessitated his shocking dismissal. Surely, he must have done something totally unforgivable for the President to fire him on a Saturday evening. If it’s just a mtter of exercising Executive authority, then it would appear to us that someone must have been completely out of his mind to make such a decision when the country is just announcing a recession.
What exactly did Dr Denny Kalyalya do that angered the President so much that he couldn’t wait for Monday? We are waiting for that scandal to unfold before we can tell Mr Lungu the depth of the grave that he is digging for himself, his party and all of us as a country.
Dr Kalyalya made a lot of statements, explaining government position of fiscal policy, but we will remember his contribution to public service as a brave Central Bank Governor who said things as they are. Today, we wish to appreciate Dr Kalyalya by reproducing some of his strong but honest quotes while at the helm of the Bank of Zambia (from the past three years):
November 22, 2017 – Economic growth: “The current relatively high fiscal deficit and debt levels continue to pose risks to macroeconomic stability… We noted that there is little economic growth to the private sector, particularly the productive sectors of the economy. We see that growth is happening but not as strong as we would like it to be. There are also still some risks in the financial stability to the economy in the non-performing loans as we have been indicating still remains high although there has been in recent time some change in direction.”
November 21, 2018 – Foreign exchange: “That foreign exchange shift in September was a source of concern. But then, you have to look at the factors. A lot of them had to do with negative sentiments; yes, we did expect the kwacha to come under pressure by the fact that the dollar will be strengthened, but it was magnified by these other factors. So, if we control on those factors, we should see relative stability in the exchange rate.”
May 26, 2019 – Money supply: “We see that under the quarter under review, money supply contracted. But this, to some extent, is consistent with the low growth that we had in the economy. So, we need money supply to grow so that growth can be supported. As things stand, we see that it contracted after growing by 0.9 per cent in the previous quarter. The contraction in money supply growth is indicative of continuing challenges in sustaining strong economic activity. We need to have a healthy growth in money supply to support economic growth. But as it is now, it’s quite constrained; that’s one of the issues that we need to address. This decline was driven largely by the decline in net foreign assets and a draw-down in commercial banks’ offshore deposits”
August 21, 2019 – Austerity measures: “I think the verdict [on whether the austerity measures are working] is still out there, isn’t it? If they were working well, we wouldn’t have the kind of challenges we are having. So, there is an issue of effective implementation, which has to be done. That’s why we keep coming back to this. So, effective implementation still remains an issue. So, the short answer to your question is that they haven’t, that’s why we want them (austerity measures) to be fully implemented.”
August 21, 2019 – Inflation: “Factors that are keeping inflation above the upper bound of the target range in the earlier part of our forecast horizon include higher fiscal deficits and the weakening of the global economy. There are indeed some still risks to this inflation outlook that we are projecting; one is that there could be further deterioration in the fiscal deficit, there could be some adverse impact coming out the monetary expansion arising from the reduction in the policy rate that we are announcing today
August 21, 2019 – Electricity tariffs: “Then, we also noticed that growth in the near-term has also weakened considerably. Part of the factors are with the production of electricity, as you know, there is quite some load-shedding going on; that is having an impact on productive units. We also noted in the (second) quarter that we are reviewing, liquidity has been quite tight; we see that these put together are causing a threat to the financial stability in the market.”
February 19, 2020 – IMF Programme: “Debt sustainability is one of the criteria for the IMF lending us support. Now, what has to be clear is that, it’s not the expectation that, tomorrow, or this year, or next year, you can get debt sustainability; I think we will be kidding ourselves, let’s be very clear on that… The [Finance] Minister is on record, we have all said it, and I think if you look at the last Article IV of the last IMF Mission, at the current levels, debt is unsustainable. That’s why we are constantly saying we need to do something. Definitely, we can’t sustain this; we have to do something about it. The expectation that, ‘tomorrow the [Finance] Minister or the government will get the debt to sustainable [level],’ that’s not realistic! It can’t happen because the amount of adjustment that you have to do will wipe out everything! You will have no economy, nothing.”
August 19, 2020 – Covid-19 stimulus fund: “We have approved close to about K5 billion in terms of applications but disbursements haven’t matched that approval rate. We have disbursed over K1 billion. Now, the others have suggested, ‘why don’t you give the money and then monitor afterwards’? But our experience has been that if you do that, by the time you come to take account, the money would have been used in a different way… The K10 billion is just but one of the tools that we have so we can’t overload it with all the demands that we need to make, so we’ll sensitively and prudently look at how this can be rolled out.”
May 19, 2020 – Recession: “The early estimates are that we expect a recession this year, which is the first in almost 20 years. I think the last time we had this was in 1999. So that already speaks to the challenge that this Pandemic is having on our economy. But I think it’s also fair to take this into context that our economy even before Covid-19 struck was having challenges. Last year we had growth of 1.9 per cent, that’s quite low, which is also historically low. So when you add Covid-19, that’s why you go to minus rather than the plus and that’s the recession. When you have recession and for us here we also have inflation, it’s a bad mix. The economy is under serious stress and if we don’t anything about it as a country, it’s threatening our very existence.
May 19, 2020 – Frustrations on the job: “Do I get frustrated? I am human, everybody gets frustrated sometimes but you have to work through your frustrations, you can’t let your frustrations get in the way of doing what you need to do. I think all of us, we have to learn to handle our frustrations; if you’re frustrated, some will go and start binge drinking or do something, you are just wasting yourself away! So, actually sometimes these frustrations are good, they push you to do perhaps more than what you did earlier. In fact, you need to get frustrated enough so that you act, you get angry from frustration and then you act, you know. There are days when you feel: ‘what is going on?’ But that’s life.”