Melo Team | Friday, 2nd February 2024 | Lusaka
Zambia’s Finance and National Planning Minister, Situmbeko Musokotwane, has expressed optimism about the country’s foreign exchange performance. He believes that the production of two major mines, Mopani and Konkola Copper Mines, along with the addition of two other mines, Lumwana and First Quantum, will contribute to this improvement. With these mining operations coming on board, Zambia is expected to see a positive impact on its foreign exchange reserves, which will further strengthen the country’s economic outlook
According to Dr. Musokotwane, the Kwacha is currently facing significant challenges due to the previous government’s procurement of fertilizer. Instead of paying in cash, the government used government bonds, which are now reaching maturity. This has put immense pressure on the currency. Additionally, the non-operation of KCM and MCM has further disrupted the smooth circulation of the currency, exacerbating the situation.
Dr. Musokotwane addressed the audience at the 2023 Budget Review Symposium in Lusaka today, shedding light on the financial aspects of the Mopani handover to new owners. He revealed that an impressive $80 million has already been sent, and an additional $50 million is anticipated in the near future. Furthermore, Vedanta Resources is expected to contribute a substantial amount of $220 million, pending completion of a court procedure. These financial commitments highlight the significant investments being made in the Mopani project, emphasizing the positive outlook for its future success.
According to Dr. Musokotwane, the occurrence of these two advancements, along with the initiation of activities by the two mines that have been non-operational, will have a positive impact on Zambia’s revenue collection. This, in turn, will lead to an influx of more dollars into the country’s economy. As a result, the performance of the kwacha against other foreign currencies is expected to improve significantly.
The Finance Minister expressed his surprise at the negative attention that Zambia’s debt restructuring process has received. Despite the country’s remarkable progress and being admired by many nations, the Minister finds it disheartening that the process has not been recognized for its success. Zambia has managed to outperform other countries that were on the brink of defaulting on their debt, making its achievements even more commendable.
During the same event, Felix Nkulukusa, the Secretary to the Treasury, revealed that Zambia has entered into non-disclosure agreements with the majority of the 17 countries that constitute its official creditors. This signifies that the details of these agreements will remain confidential, ensuring that sensitive information regarding the country’s financial dealings with these creditors will not be disclosed to the public or other parties.
Bank of Zambia Governor, Denny Kalyalya, has revealed that the nation’s import cover is currently in a favorable state. However, the liquidity issue persists within the foreign exchange market, posing a challenge for the country. Despite this hurdle, the overall performance of the import cover is commendable, indicating a positive economic outlook for Zambia.