• Financial markets respond to speculation.
• Those following the discussions are not optimistic about a possible bailout
• If it is successful, it will impact on the relationship between Kwacha and other major convertible currencies.

Civil Society for Poverty Reduction (CSPR) says successful engagement between Zambia and International Monetary Fund (IMF) is likely to have a positive impact on the Kwacha in relation to major convertible currencies.
Speaking to Money FM News, Organization Board Member Partner Siyabutuba said the financial market is failing to respond favorably due to delays by the two parties to conclude the talks on a possible bailout.
Mr. Siyabutuba stated that financial markets respond to speculation, therefore those following the discussions are not optimistic about a possible bailout because the engagement has been going on for a very long time without being concluded.
“Financial markets respond to speculation so it means that those that are following the IMF-Zambia discussion are not very optimistic about the bailout because if there was some optimism the financial markets would be reacting. We would have been seeing the Kwacha standing at a certain point, but because this conversation of the IMF-Zambia has been there for so many years, this is a story that is not even impacting on the financial market.”
“If by any chance it is successful, it will impact on the relationship between our currency and other major convertible currencies, but because of the manner in which these conversations have procrastinated, the financial market is failing to respond to it so it tells you a story that this discussion is not likely to be coming through any time soon for it to impact our economy and the financial market,” Mr. Siyabutuba charged.
He noted that the performance of the Kwacha against major convertible currencies has continuously and consistently been performing going down.
Mr. Siyabutuba further said the only way to bring the Kwacha down against the US Dollar and other currencies is if the country is able to export more.
“We took off from a lower performance relationship but now we are talking about over K22 and we are just a few points to K23 and when you look at the economic fundamentals, there is nothing that can stop the Kwacha from depreciating further, and so we are anticipating a further depreciating of the Kwacha.
And now there possibly can be these artificial efforts to try and halt the further depreciation but because of the current economic fundamentals that do not hold, the Kwacha cannot stand against major convertible currencies,” he said.
Meanwhile, Mr. Siyabutuba noted that when a country is experiencing unrest, as is the case in South Africa, production levels are likely to go down thereby affecting export targets and performance of the currency.
“Production levels will go down because of the unrest that you are experiencing as a country and when your production goes down, it means that you are not able to meet your export target.”
“So if you are not able to meet your export target because of the unrest in the country and because of the low production that is going on, then you are not going to export and your currency will suffer because then you may have to import some of the things that ordinarily you will be producing by yourself and then you even sale out so you might end up going to the neighboring country to buy those things so the chance is that you might even weaken your currency,” he said.