K27.3 and rising-Peek View of Musokotwane and Kalyalya on the Volatile Exchange Rate- Amb. Emmanuel Mwamba

K27.3 and rising-Peek View of Musokotwane and Kalyalya on the Volatile Exchange Rate

By Amb. Emmanuel Mwamba

It’s clear that Minister of Finance and National Planning Dr. Situmbeko Musokotwane and Bank of Zambia Governor, Dr. Denny Kalyalya have just given up on keeping the rapid depreciation of the Kwacha on the narrow….

This is probably their conversation behind scenes;

Musokotwane; “Denny, I think we may have to stop panicking every morning. You know with these BPs,..let the Kwacha find its own equilibrium, its own true value.”

“We have thrown everything at it. We have depleted foreign reserves, you have instituted the most difficult monetary policies and measures ever and restricted money supply!”

Denny Kalyalya; “…ya it will hurt, I agree. We may have to let the Kwacha find its true value or lack of it!..I now also have to worry about the inflation rate. It is also rising”.

Situmbeko; “But P1 is ranting! You know his crazy campaign promises always haunt him. I have told him to tell the nation, that those pronouncements are unattainable. That was just campaign talk. How is he going to deliver mealie-meal prices at K50 per 50kg bag or fuel at K12 per litre….but he is ranting that we should do something about the Kwacha!”

Kalyalya; “There is very little we can do. My foreign exchange reserves are falling perilously. Had it not been for the $184m injection from IMF in December 2023, the Reserves would stand below the 3 months worth of import cover.”

I’m hoping that the durective I issued effective from Jan. 1, implementing the electronic export proceedings tracking framework will begin to help us retain some export proceeds locally”

” However, it apoears exporters are already resisting. You know this directive require all exporters to open and maintain an account with a bank located within the country. Further all export invoices must be processed through a financial institution domiciled in the country…but I will get an update from the banks on this”

“However, tell P1, there is a silver lining to all this. His friends, the foreign investors, are extremely happy! They can pay salaries and meet cost of utilities with far far less dollars! I guess more money in their pockets !”

Musokotwane;” Wena! But anyway, we have to worry about key imports. We have just survived meeting international fertiliser payments….but I’m worried about fuel. It may reach K35 ir more per litre…I have no more funds, instruments or reserves to keep it below the psychological K30 per litre!”

” Also, the IMF want me to re-introduce the 25% customs duty on petroleum products. They are mad! They say the waiver we did is part of official indirect subsidies.”

“They say we are losing critical domestic revenue with that measure I did to abolish customs duty on fuel. But if we re-introduce that and reimpose duty on fuel, it will send the price of fuel to the roof and the inflation rate may have to find its true value too.”

Kalyalya; “But Doc, thinking seriously of that, the fuel price may have to find its own true value too…you are the politicians, you may have to find a credible explanation to the people, a convincing narrative that you should give the public.”

Musokotwane; ” You know that is another of the biggest problems we have. This crisis is as big as the media crisis”.

“The media team have let us down. They are reactive, ignorant, absent and are downright incompetent………kima insults fela”.

“Further, I don’t know how long the people have to tighten their belts”.

“They have finished all the notches on the belts with this high cost of living.”

Kalyalya; “But it starts with P1. Let him stop giving false promises. Let him be truthful. He is now President. When governing, we don’t promise, we deliver. Let him take responsibilities too…Doc, I have to go, I have to take these calls. The banks are desperate, they want more dollars!”

Musokotwane; Oh my! good luck with that. Lukabonana”