IMF AGREEMENT TO BOOST KWACHA - STANCHART
THE Kwacha is expected to trade in the range of K15 to K14 lev els against the United States dol lar with the recent IMF staff level agreement, Standard Charetered Bank has predicted.
Currently, the local unit is trading around at K17.4 and K17.64.
The support towards the Kwacha has so far been made after the an nouncement of the US$1.4 bil lion, says Standard Chartered Bank Zambia Head Financial Markets and Rates Trading, Muchindu Lombe.
On Monday this week, IMF reached an agreement with the Zambian authorities on a crucial three-year lending programme worth around US$1.4 billion.
“The IMF programme will attract positive sentiments on the market
which might positively impact the foreign market exchange market.
“The foreign market plays a sig nificant role on the inflation rate and it is projected to reach 13 per cent next year. Improvement in the foreign market helps various sectors and also attract more offshore in vestors,” Mr Lombe said during the virtual meeting on Zambia’s Market outlook.
With the IMF programme, he said, the Zambian economy was project ed to grow by about 3.5 percent next.
Meanwhile, Mr Lombe said re moving subsidies in the energy sec tor would attract more players in the industry.
According to Mr Lombe, the de velopment would channel in more investors, help the country have a diversified and wider access to electricity.
“We must not just look at the pain ful part of the removal subsidies but the positive aspect in the long term as well,” he said.
And Bank’s Head of Research, Africa and Middle East, Razia
Khan, expressed optimism that the Zambian economy would remain resilient despite the coming of the fourth Covid-19 wave due to in creased vaccinations.
Ms Khan indicated that the out look was positive and that the econ omy might grow by about 3.2 per cent to 3.5 percent going forward.
“The year 2022 is likely to be an important turnaround year for the Zambian economy, with negotia tions towards an IMF programme, debt restructuring talks with credi tors and a hoped-for boost to copper mining.
“The 2021 picture is uneven in terms of recovery due to the im pact of covid-19.woith the coming of the IMF programme it has given creditors confident in the Zambian economy that the country is credit worth,” Ms Khan said.