(3 minutes read)
· Zambia’s gross foreign exchange reserve dropped by US$117.7 million to US$1.2 billion, according to official data
· This works out to equivalent to 2.4 months of import cover at the end of 2020 from US$1.3 billion at the end of September, which was equivalent to 2.3 months
· Bank of Zambia has started building up gold reserves and released a schedule of gold buying targets
Financial Analysts have urged the Zambian Finance Minister to prioritize debt restructuring to a sustainable level to grow the foreign exchange reserves as well as help stem the pressure on the currency Kwacha. Huge payments are made in US dollars towards debt servicing by the country. This, in turn, is resulting in increased demand for dollar , thereby eroding the value of the local currency.
Zambia’s gross foreign exchange reserve dropped by US$117.7 million to US$1.2 billion, according to official data. This works out to be equivalent to 2.4 months of import cover at the end of 2020 from US$1.3 billion at the end of September, which was equivalent to 2.3 months. Central bank’s interventions are said to be the reasons for depletion of reserves, necessitated by debt service as well as fuel and fertilizer imports. The way out, the analysts point out, is restructuring of debts.
Bank of Zambia has started building up gold reserves and released a schedule of gold buying targets. Also, the Ministry of Finance hired an international firm Lazard to help in the process of debt restructuring. However, no monthly updates are made available to the public so far about the proposed plans for debt restructuring. The consultancy, among other things, would recommend how to restructure the debts and beef up the reserves.
