Maravi

CIMA asks govt how IMF loan will be repaid

CIMA asks govt how IMF loan will be repaid
Written by Nchima Nchito Jr
Friday, May 29, 2009 4:25:54 PM

CHARTERED Institute of Management Accountants (CIMA) country manager Kennedy Msusa has asked the government to state what economic activity will support the repayment of a loan recently acquired from the IMF to help boost the kwacha performance.

In a statement, Msusa stated that issues that needed to be addressed from the productive side of the economy related to how the loan secured from the IMF would be used by the Zambian government and what economic activity would thrive to generate corresponding resources to repay the loan.

Msusa cautioned that in the current business environment where sustainable development was top on the national agenda, it was important that government borrowing leaned towards supporting economic diversification initiatives.

“Recently, there have been concerns in the market over the sustainability of the kwacha appreciation. The absence of key fundamentals upon which the kwacha appreciation can be anchored has seen the fluctuations being triggered by market speculative activity. The recently acquired IMF loan has sent signals in the market thereby leading to the appreciation of the kwacha,” Msusa stated.

He stated that although a weak kwacha favoured exporters, including mining companies, the situation was detrimental and a threat to increased inflation levels due to the fact that most of the products consumed on the local market were imported.

And Msusa stated that efforts to strengthen the Zambian currency should be pursued.

“The Bank of Zambia should implement the existing anti-dollarisation legislation. Secondly, commercial banks should consider discouraging facilitation of local invoice payments denominated in foreign currency so as to prevent artificial demand for US dollars. It is also important that commercial banks desist from unfavourable speculative activity that tends to put pressure on the exchange rate,” stated Msusa.

Labels: CIMA, DEBT, IMF, KENNEDY MSUSA

posted by MrK @ 3:23 PM