GOVERNMENT has revoked Statutory Instrument (SI) No. 33 of 2012 and 55 of 2013, which supported the implementation of the monetary policy on foreign currency.
And in a swift financial market reaction, the Kwacha reportedly appreciated a few minutes after Minister of Finance Alexander Chikwanda announced the revocation of the two instruments.
SI 33 barred quotation in foreign currency of goods and services while No. 55 enabled Government to monitor inflows and outflows of forex.
The revocation of the two SIs is expected to assist Government stabilise the depreciation of the Kwacha, which was trading at K6.40 for US$1.
Mr Chikwanda told a media briefing in Lusaka yesterday that the two SIs have been revoked as challenges had arisen in their implementation.
The minister did not, however, state whether the two SIs were responsible for the depreciation of the Kwacha.
Mr Chikwanda said early this week, Government held a consultative meeting with the business community at which concerns were raised on the two SIs.
“This Government is a product of the wishes of the people. We had an interaction with the business community and they made very strong statements about SI 33 and SI 55. Government cannot take irrevocable and immutable stances on issues of national importance.
“We cannot totally ignore the feelings, perceptions and sentiments of our various stakeholders,” Mr Chikwanda said.
He said Government, in consultation with other stakeholders, will look at other veritable options to protect and safeguard public interest.
“I would like to assure the nation that Government is firmly in the driving seat to steer the economy of our beloved country to greater economic prosperity which is possible if all Zambians are active agents of development,” he said.
And Mr Chikwanda said the downward trend in the Kwacha is a temporal situation.
He said the depreciation does not necessarily imply a weakening economy.
Mr Chikwanda said Government will not be tempted to put in place interventions that might affect the reserves.
“In the long term, we will need to increase our resilience to shocks by accelerating the diversification of the economy away from copper to ensure resilience to global financial shocks,” he said.
And Mr Chikwanda said Government will seek consensus on the Constitution-making process to enable the country formulate a document that will stand the test of time.
He said Zambians should approach the Constitution ‘question’ sensibly as there is no compelling reason for people to create anarchy.
“At the moment, the priority of Government is to put food on the table. The Constitution is not an urgent matter as Government has to address the suffering of its people,” he said.
And the World Bank says the revocation of the SI 33 and SI 55 demonstrates Government’s commitment to dialogue with various stakeholders.
World Bank Group country director for Zambia, Malawi and Zimbabwe Kundhavi Kadiresan said action will enhance public confidence in policy-making.
“This signals that the Government values consultation with the private sector on important policy changes. The Zambian economy had recently gotten into a difficult situation with a large budget overrun in 2013 and increasing uncertainty about economic policies and direction.
“This difficult situation is partly reflected in the rapid depreciation of the Kwacha and accompanying sense of panic in the markets,” she said.