The Bank of Zambia (BoZ) says budget execution remained under strain in the second quarter of 2018, with both revenue and expenditure being lower than programmed.

According to the BoZ Monetary Policy Committee Statement for Second Quarter of 2018, the fiscal deficit (on a cash basis) for 2017 was revised to 7.8% from 6.1%; in 2018, noting that the fiscal deficit is likely to remain above 7.0%.

BoZ Governor Dr. Denny Kalyalya says arrears rose to K13.9 billion in March 2018 from K12.7 billion in December 2017.

Dr. Kalyalya says these developments have adverse effects on the economy.

He further notes that full implementation of the austerity measures announced by the Government through the Ministry of Finance is critical to maintaining macroeconomic.

The Central Bank Governor has also disclosed that the Kwacha depreciated by 1.4% against the US dollar, but strengthened against the British pound, the Euro and the South African rand.

He says despite an improvement in the supply of foreign exchange, the Kwacha depreciated by 1.4% against the US dollar compared to an appreciation of 1.9% in the first quarter.

He adds that the Kwacha continued to depreciate against the US dollar in July and August, with the exchange rate weakening by close to 2% since the end of June.