BOZ CALLS FOR BOOST IN GROWTH AGENDA
has recorded steady growth this year compared to last year and requires upscaled effort to reduce poverty and inequality, the Bank of Zambia (BoZ) has said.
BoZ Governor Danny Kalyalya said growth for the first half of 2018 was 3.3 percent compared to 3.1 percent in the first half of last year.
He however stressed that Zambia needed to grow much more strongly to reduce poverty, inequality and achieve long term goal of becoming a prosperous middle income country by 2030.
Dr Kalyalya was speaking at a media briefing in Lusaka.
“Monetary policy in 2017 continued to focus on maintaining inflation in single digits, with an end-year target of 9.0%. With inflation falling within the target range and projections consistently pointing to low inflation, the Bank eased monetary policy to support economic growth and minimize financial system stability risks.
“The Bank reduced the Policy Rate to 10.25% by November 2017 from 15.5% in 2016 and lowered the statutory reserve ratio to 8.0% in November 2017 from 18.0% in 2016,”he stated.
He explained that during 2018, monetary policy remained accommodative and that in the first quarter the Policy Rate was lowered to 9.75 per cent from 10.25 per cent.
Statutory Reserve Ratio was reduced to 5.0 per cent from 8.0 per cent.
Dr Kalyalya stated that BoZ maintained the rates during the year as projections showed that inflation would remain anchored within the target range of 6-8 per cent in the medium-term.
“This policy stance was and is still intended to support economic activity and contain some vulnerabilities affecting the financial sector. In addition, the decision took into account the prevailing high lending rates, which continue to constrain access to credit, especially by the productive sectors of the economy.
“In the third quarter of 2018, we saw some expansion in total domestic credit, which grew by 9.9% driven by strong growth in lending to private enterprises and households, and a pick-up in credit to Government. Increased demand for working capital by private enterprises and lower interest rates on salary-backed loans to households, partly accounted for growth in credit to these sectors, “he said.