The Central bank has disclosed that debt servicing costs are putting pressure on the central bank reserves and other aspects of the economy.
Bank of Zambia (BOZ) Governor Dr. Denny Kalyalya says the international reserves declined from $163 billion (1.9 months of import cover) to $1.5 billion (representing 1.8 months of import cover) recorded at the end of September 2018.
Dr. Kalyalya says this was mainly driven by external debt service payments.
He says the fiscal consolidation measures that government has put in place are not coming quickly enough to address the country’s vulnerabilities.
Dr. Kalyalya says there is still a lot of work that needs to be done and that this is an area that remains of great importance in terms of public policy and interest
The Central Bank Governor says: “We see that arrears as the minister indicated have gone up, public debt, has also continued to go up, external debt service payments have risen quite significantly.”
He was speaking in Lusaka when he made the Monetary Policy Presentation as decided by the Monetary Policy committee (MPC) during their meetings on 18th and 19th February 2019.
Meanwhile the Bank of Zambia Monetary Policy Committee has maintained the Monetary Policy Rate 9.5 percent, to the expectations of experts.
Dr. Kalyalya says this is because the inflation rate is expected to remain between 6 to 8 percent for the next 8 quarters.
He says the committee considered the inflation projections which suggest that it will remain within the 6 to 8 percent target range, although close to the 8 percent upper bound, continued subdued economic activity and sluggish private sector growth.

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