BOZ Governor – Kalyalya’s contract renewed…..
Central Bank Governor in Africa’s second largest copper producer Zambia, Dr. Denny Kalyalya’s contract was renewed and given another 5 year lease making him the second longest serving reserve bank head after Dr. Caleb Fundanga – who served between 2002 to 2011. Kalyalya’s contract was renewed effective February, allowing him to oversee monetary policy up to 2023, this was confirmed by the Bank of Zambia Public Relations division.
Dr. Kalyalya is the proponent of the tight monetary policy – when BPR was hiked 300bps to 15.5% – that tamed the ‘Kwacha rout’ experienced in 2015 when inflation spiked to 22% levels as yields on government securities swelled to 20% to 26% levels. Kalyalya’s interventions then saw yields on the debt curve ease over 1,000bps and inflation narrow to a single digit band of 6-8% levels. It is during his clock that the policy – interest – rate was relaxed 575bps to 9.75% in (4) rate aggressive rate cuts from 15.5%. Kalyalya’s task will be to -in conjunction with Ministry of Finance – achieve the requisite intimacy between fiscal and monetary policy that is currently anaemic as Zambia grapples with debt stress at a time when the copper producer intends to grow out of its fiscal challenges while simultaneously pursuing an IMF USD1.3billion bailout deal.
Kalyalya’s scored card in the next 5 years – aligned to the medium term expenditure framework – is to see growth revert to 7% levels by making lending affordable while building a thick reserve buffer of above 3months import cover. Zambia’s reserves are thinly USD1.8billion at an 8yr low with an USD8.7billion external debt. He will surely be key in sourcing dollars for debt service as the 2022 eurobond falls due. Kalyalya can only do as much from the monetary policy side which has seemingly bottomed, however getting Zambia out of the woods will be more a function of fiscal discipline and how tight the lid on expenditure will be.
“The renewal shows the level of confidence the state has in the current governor and is a good move from a stability point of view as it will demonstrate dedication by Zambia to address the current fiscal misalignment’s – a signal investors and market players wish to see,” Business Times Analyst said in a note to international clients on 18 May. He is one of the boldest governors, the market has ever seen, exuding the highest professionalism and independence showing the market that central banks can be autonomous even in politically infested environments, he said.
Bank of Zambia Governor Dr. Denny Kalyalya (left) with Deputy Governor Operations Dr. Tukiya Mabula Kankasa (left).