‘Zambia will not go for exchange controls’

AS THE Kwacha continues to nose-dive, Government and the central bank have reiterated that they have no intention of reintroducing foreign exchange controls to cushion the local unit currently breached the K9-mark.
Both, Minister of Finance Alexander Chikwanda and Bank of Zambia (BoZ) governor Denny Kalyalya ruled out foreign-exchange controls as a measure to halt the Kwacha’s 35 percent plunge against the dollar this year, stating that the intervention strategy to defend the currency has limitations.
According to Bloomberg, Mr Chikwanda said currency restrictions will be a step backward for an economy reeling from a plunge in copper prices.
“They [exchange controls] don’t help, they actually accentuate the difficulties. Even the little foreign exchange we have would be taken out if we have control of capital movement. – It is a recipe for getting the country backward,” he said.
He said the move will also create panic on the market and this would have a negative impact on the business environment.
Zambia earns 70 percent of export income from the metal and the falling copper prices on the global market have impacted negatively on Zambia’s economy, which is also grappling with power shortages.
Dr Kalyalya said, “Controls don’t work because people eventually find a way around. It is clear what the government policy is, we are going to maintain a flexible exchange rate.”

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