CURRENT MONETARY POLICY MEASURES INDICATIVE OF A FAILING ECONOMY
By Tellah Hazinji
Economist Highvie Hamududu has charged that the changes in the monetary policy measures are indicative of a failing economy, thereby leaving the central bank with no choice but to reduce money supply.
Mr. Hamududu notes that this is because there is little production in the country adding that the level of money supply must correspond with the level of production.
He says the problem therefore does not lie with the central bank but with fiscal policy owing to a failing economy and that it is for this reason that the central bank has to protect the Kwacha to maintain its integrity and reduce inflation.
Mr. Hamududu has told Phoenix News that there is need for a wider economic policy especially driven by the Ministry of Finance which requires the triggering of economic growth sector by sector.
He has since urged the government to go back to the drawing board and set up more radical reforms as the current ones are not adequate to remedy the situation.
The central bank recently increased the statutory reserve ratio and the monetary policy rate in a quest to arrest the depreciating Kwacha and tone down inflation, a decision that has been received with mixed feelings.