Daily Nation Newspaper - - BUSINESS AND CORPORATE WORLD -

By BUSI­NESS RE­PORTER THE Bank of Zam­bia (BoZ) has main­tained the mon­e­tary pol­icy rate at 9.75 per cent with a pledge to en­sure con­sis­tency in the econ­omy and af­ford­able credit to the pri­vate sec­tor.

Mean­while, the Cen­tral Bank has also main­tained the statu­tory re­serve ra­tio at 5.0 per cent.

BoZ Gov­er­nor, Denny Kalyalya, ex­plained that as­sess­ment con­ducted by the Mon­e­tary Pol­icy com­mit­tee this week in­di­cated that the cur­rent level was ap­pro­pri­ate as in­fla­tion had been trend­ing down­wards.

He was speak­ing at a me­dia brief­ing in Lusaka yes­ter­day.

“Af­ter trend­ing down­wards for seven con­sec­u­tive quar­ters, the an­nual in­fla­tion edged up in the first quar­ter of 2018, but re­mained within the 6-8 per cent tar­get range.

“In­fla­tion is pro­jected to rise above 7 per­cent dur­ing the sec­ond and third quar­ter in 2018, but there­after de­cline to­wards the lower bound of the 6-8 per cent range over the re­main­ing six quar­ters of the year,” he said.

Dr Kalyalya ex­plained that risks to in­fla­tion out­look were skewed to the up­side and in­cluded lower crop pro­duc­tion in the 2017/18 agri­cul­tural sea­son as well as faster than ex­pected in­creases in crude oil prices. He, how­ever, said an­tic­i­pated higher cop­per prices were ex­pected to mod­er­ate in­fla­tion­ary pres­sures through the ex­change rate chan­nel.

Dr Kalyalya fur­ther ex­plained that other than in­fla­tion, the com­mit­tee took into ac­count the sub­dued credit growth, par­tic­u­larly to pri­vate en­ter­prises.

He said weak credit growth to the pri­vate sec­tor, mainly driven by higher than pro­grammes bud­get deficits, high lend­ing rates and ris­ing non-per­form in loans was key con­trib­u­tor to eco­nomic growth fragility.

“Growth in to­tal do­mes­tic credit slowed down in the first quar­ter of 2018, grow­ing by 1.3per­cent com­pared to the 4.9per­cent reg­is­tered in the fourth quar­ter of 2017. Dur­ing the pe­riod, lend­ing to Gov­ern­ment ex­panded by 1.7per­cent com­pared to 5.3per­cent pre­vi­ously.

“On the other hand, credit to pri­vate en­ter­prises con­tracted by 3.5per­cent against an ex­pan­sion of 8.3per­cent in the fourth quar­ter. The con­trac­tion in Kwacha de­nom­i­nated loans largely ac­counted for this out­turn,” he said.

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