• The Kwacha has continued to be under pressure.
• People thought the visit by IMF Managing Director was going to have some kind of influence on the Kwacha.
• The Kwacha didn’t react and that just shows that Zambia has bigger problems.

An Economist says failure by the Kwacha to react to the recent visit by International Monetary Fund (IMF) Managing Director and US Treasury Secretary is an indication that the country has bigger economic problems.

Speaking to Money FM News, Emmanuel Zulu said some sections of society had expected the visit by Kristalina Georgieva and Janet Yellen to have an influence on the Kwacha and bring in investor confidence but that was not the case.

Mr. Zulu stated that investors are now getting to understand the context of the economic challenges that Zambia is facing mostly arising from the debt crisis.

“The Kwacha has continued to be under pressure and people thought the visit by the IMF Managing Director Kristalina Georgieva and Treasury Secretary from US Janet Yellen was going to have some kind of influence on the performance of the Kwacha especially bringing in investor confidence. But it didn’t turn out as expected by some sections of society, the Kwacha didn’t react. That just shows that Zambia has bigger problems.

“Before that the Kwacha kept depreciating because of the increase in the appetite for imports. Zambia still remains an import heavy country, during the close of the year we got to see the Kwacha slide down and this was attributed to the festivals. As much as the festive season contributed to the increase in imports, we had a Euro Bond which was due in September and we did not service it and that in itself means that our debt stock continues to increase,” Mr. Zulu noted.

He added that the non-payment of the euro bond shows investors that the country is still stressed and this is also reflected on the market.

Mr. Zulu further said investment pledges that have been coming through may not be actualized immediately, hence they are not influencing the market in any way.

“What also played a role in seeing the Kwacha perform badly against the dollar is the crisis in the energy sector. We saw load shedding being announced that it will be for 12 hours then it went to six hours but you know how much of a role power plays in production, so that also affected our levels of production because we did not produce as much as we should have,” he stated.

The US Dollar is currently buying at Eighteen Kwacha Ninety Six Ngwee and selling at Nineteen Kwacha Thirty Three Ngwee.