The Economic Association of Zambia has advised the Zambian authorities to relook the balance of payment monitoring mechanism in light of the recent currency weakening trajectory which has seen the Kwacha slide to levels of K13 representing an 8.6% depreciation.
In a statement issued to Money FM News by the association national secretary Mutisunge Zulu, the association has observed that timely and accurate balance of payment (BOP) data is vital to inform and advise authorities accordingly.
Mr Zulu says timely and accurate information assists authorities to appropriately respond to developments in the economy.
He says if firms are currently front-loading imports due to uncertainty in the exchange rate developments, only BOP monitoring can shed light on such trends stressing the need for the banking sector is linked to the tax administration.
Mr Zulu says when a firm, through its bank, sends foreign exchange abroad for importation of goods, the information should immediately be shared with relevant stakeholders like ZRA, BOZ and CSO.
He says the Association has observed lapses in the current monitoring system and noted the risk of unaccounted for flows.
He has citied one-legged foreign transactions or mismatches which may negatively impact the foreign exchange flows and accurate taxation capture.
Mr Zulu adds that BOP monitoring involves private external debt monitoring and is important to ascertain foreign exchange outflows and the stock and structure of private external debt.
He further says balance of Payments (BOP) position is currently under pressure because the current monitoring mechanism is lagged and based on the goods side of the economy, without balancing this with the money side of the economy.
“This is not sustainable and not thorough enough to account for foreign exchange flows” He said.
“The Association appreciates that Zambia is a liberalised economy, but advises that some form of monitoring in areas such as foreign currency cash importation is needed to balance such flows”
Mr Zulu has further advised the authorities to revisit the Statutory Instrument No.55 attempted a few years back which was hastily implemented.
He notices that the de – dollarization regulation is a tool which the Association believes was introduced with good intentions.
Mr Zulu laments that aallowing for price quotes in foreign currency in the name of the free market economy has cost the Kwacha its sovereign value.
Mr Zulu says the Association is of the view that the authorities should implement electronic forms of BOP monitoring which should strive to reconcile with transactions that the revenue authority sees in the market.
He says automated process have the benefit of minimising manual interventions which most commercial banks grappled with a few years back during SI.55 implementation.
“The Association looks forward to a time when SWIFT, Visa, Master Card, Western Union and other payment gateways will integrate into the regulators systems to aid effective monitoring” He said.
He says the success of this monitoring mechanism offers a breakthrough in curbing the purported illicit capital flight out of Africa and the unpaid and underpaid taxes.