Maravi

IMF loan to enhance reserves - BoZ

IMF loan to enhance reserves - BoZ
Written by Kabanda Chulu
Thursday, May 14, 2009 3:58:36 PM

THE Bank of Zambia (BOZ) has said the recently acquired loan from the International Monetary Fund (IMF) will increase Zambia's international reserves to enhance the country's ability to manage potential external shocks and related risks.

And without giving specific levels or targets, BOZ head of public relations Kanguya Mayondi stated that in the short term the kwacha would be strengthened while in the medium term, the kwacha is expected to stabilize as the IMF disbursement was a catalyst to other cooperating partners to come in.

Commenting on the IMF loans and its projected impact on the kwacha, Mayondi yesterday stated that the Central bank would continue to observe developments in the foreign exchange market with the view to minimising the volatility of the kwacha.

"The disbursement of these funds to Zambia by the IMF will in the short to medium term have some positive impact on the economy in general and the foreign exchange market in particular. The additional funds will boost Zambia’s international reserves, thus enhancing the country’s ability to manage potential external shocks and the expected short term impact is to strengthen Kwacha. In the medium term the Kwacha is expected to stabilise as the disbursement is a catalyst to other cooperating partners to come in," Mayondi stated in response to a query. "It is also worth noting that copper prices have significantly improved in the last few weeks, at times to levels above US$ 4,600 per tonne from a low of US$ 2,900 per tonne in December 2008. This positive development will also contribute to the restoration of confidence in the Zambian economy and foreign investments."

He stated that the market has reacted positively to the news of increased financial support by the IMF to Zambia.

"In addition, other stakeholders, such as, investors, both local and foreign, have expressed positive sentiment in the developments associated with the additional resources made available to Zambia," stated Mayondi.

As at yesterday, the kwacha closed trading at between K5, 120 and K5, 160 per US dollar after opening trading sessions at between K5,110 and K5,550 per US dollar.

On 1st May 2009, the executive board of the IMF reviewed Zambia’s economic performance under the Poverty Reduction and Growth Facility (PRGF) arrangement for 2009-2011 and approved an increase in financial support by US $ 256.4 million to US $329.7 million to assist Zambia cope with the global economic slowdown and financial crisis.

Labels: BOZ, DEBT, IMF

posted by MrK @ 3:01 PM