Sean Tembo Surprised That The Central Bank Keeps Increasing Statutory Reserve Ratio And The Monetary Policy Rate



…..Reiterates need for Govt to issue statutory Instrument to compel mining companies to remit gross proceeds of mineral sales back to Zambia…

Liberty House, Lusaka

1. As Patriots for Economic Progress (PeP) we are surprised that the Bank of Zambia (BOZ) keeps on increasing the Statutory Reserve Ratio (SRR) and the Monetary Policy Rate (MPR) in a quest to arrest the depreciation of the Kwacha, despite clear evidence that these two interventions are neither effective nor desirable.

2. The Statutory Reserve Ratio was at 9% at the beginning of this year, until it was increased to 11.5% in February, then to 14.5% in August and then to 17% in November and yet the Kwacha has not shown any signs of responding to these huge adjustments in SRR. The same has been the case with the Monetary Policy Rate which currently stands at 11% after being increased by more than 400 basis points in the course of 2023.

3. As Patriots for Economic Progress, we have always reiterated that the most sure and sustainable way to support the Kwacha exchange rate is by Government issuing a Statutory Instrument that would compel all mining companies to remit the gross proceeds of mineral sales back to Zambia. Currently only a small fraction of the forex proceeds from mineral sales is remitted back to Zambia. That is the reason we have a balance of payments (BoP) surplus on paper and yet there is a shortage of forex on the market.

4. As Patriots for Economic Progress, we are beginning to doubt the competence of the BOZ Governor Dr. Denny Kalyalya and his staff because they appear to be fixated on implementing wrong forex policies despite ample evidence that those policies do not work, but have a destructive effect on the financial services industry as well as the cost of living. Perhaps it is time to consider a new BOZ Governor. Someone who can formulate and implement progressive forex policies that can produce results.

///END 27.11.2023

Issued by:

Sean E. Tembo (SET)
Party President
Patriots for Economic Progress (PeP)
Lusaka, Zambia


  1. I am surprised that despite the stringent fiscal on the expenditure side and aggressive tax collection on the revenue side, the exchange rate keeps on losing ground. It is time to change the currency. We need to rule out of illicitly printed money being offloaded in the economy. It is alarming that whilst ordinary people on the streets have no kwachas in the pocket, people with a penchant for forex have all the money/kwacha chasing after the little dollars in reserve. Question is where is this excess kwacha coming from when ordinary consumers/ the public are short of it. There is something fishy going on.

  2. Sean Enock Tembo, you do not know what it is to be in a financial crisis occasioned by unplayable foreign debt. That crisis is still in force and is the reason monetary policy is being so tight. There’s no room to make normal policy. The central bank has few options left to prevent a currency crisis in which things would be much worse than what we’re going through. However, the argument that Zambia has too open a foreign exchange regime compared to regional trading partners such as Botswana, South Africa and Namibia is a valid one.


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