By Ernest Chanda of the Mast
BANK of Zambia governor Christopher Mvunga says investor confidence is high following government pronouncements on fiscal discipline, as the bank maintains the 8.5 per cent monetary policy rate.
Announcing the Monetary Policy Committee’s latest decision, Mvunga said such pronouncements have resonated well so far with the international community.
“I am sure you’ve heard strong pronouncements that are coming from government in terms of their commitment to ensuring that fiscal consolidation is achieved and optimal utilisation of resources,” he told journalists at BoZ head office in Lusaka yesterday. “This is resounding very well or resonating very well with the international community and investor confidence is high. So we are on the right track.”
And Mvunga emphasised that only the private sector could help grow the economy.
He said expecting the economy to be government driven was a wrong concept.
“…For any economy to thrive it has to be private sector driven. And if we expect our economy to be government driven then we are on the wrong thinking because we need to promote and enable the private sector to drive the economy. And let government provide an enabling environment,” Mvunga added. “I think the Minister of Finance has made that point. The President has made that point. That we need full participation of the private sector if we are to push this economy forward. It’s the private sector that is going to create jobs, leaving government to establish an enabling environment for the private sector to drive.”
And justifying the sustained policy rate, Mvunga attributed it to favourable outlook for the exchange rate and improved prospects for fiscal consolidation.
“The Monetary Policy Committee decided to hold the monetary policy rate at 8.5 per cent. Inflation is projected to decelerate faster and edge closer to the target range than was earlier envisaged in the May 2021 MPC meeting. Mostly on account of the favourable outlook for the exchange rate and improved prospects for fiscal consolidation,” said Mvunga. “In arriving at this decision, the Committee remained mindful of the subdued economic activity and existing vulnerabilities in the existing financial system. Implementation of fiscal adjustment measures premised on fiscal discipline, the dismantling of domestic arears, enhancement of revenue collection, achieving a sustainable budget balance, securing an IMF programme, and external debt restructuring remain critical to restoring macroeconomic stability.”