A Business and Financial Analyst says even though the US$1.3 billion loan that Zambia is seeking from International Monitory Fund (IMF) may not address current economic challenges, it will inspire investor confidence.
Blessings Kafwanka says the foreign reserves have been dwindling of late due to the government’s failure to seal a deal with the IMF when they started negotiations in 2014.
Mr. Kafwanka also says the US$3 billion Euro bonds that government acquired went to foreign contractors as they have been engaged to do most of the projects in the road construction, health, education, infrastructure and other key sectors.
He said this when he featured on Money FM Business Radio’s Power, Policy and Money Programme that airs every Mondays and Thursdays at 9hrs.
Mr. Kafwanka said Zambia needs to go back to the drawing board and analyze how the foreign reserves can be boosted.
He said the recommended foreign reserves in the SADC countries is about six months of import cover saying Zambia at the moment has about one month of import cover.
He said this is dangerous for a developing country like Zambia.
The Business and Financial Analyst recalled that in 2011, Zambia had about six months of import cover as its foreign reserves stood at about US$5.9 billion.
He said government should take seriously the projection by the Standard Bank Group that has projected that Zambia’s foreign reserves may dwindle to about US$1 billion by June, 2019.
Mr. Kafwanka stated that Zambia at the moment should also strive to diversify the economy and stop the over dependency on mineral exports that accounts for over 80 percent of Zambia’s exports.
Meanwhile, A Financial Analyst has warned that Zambia’s foreign reserves risk dropping to about US$1 billion if certain measures are not put in place.
Making a contribution during Money FM Business Radio’s Behind the Markets Segment, Munyumba Mutwale of Nikiwa Capital Partners says despite Zambia recording a trade surplus, it may not help the country in building the reserves.