BOZ Gov­er­nor – Kalyalya’s con­tract re­newed…..

Zambian Business Times - - FRONT PAGE -

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).

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