By SYLVESTER MWALE –
THE Government will not undertake any desperate measures that may lead to the depletion of the country’s foreign reserves in a bid to control the depreciation of the Kwacha but will use appropriate policy instruments to stabilise the local currency.

. Chikwanda

Finance Minister Alexander Chikwanda said as a short-term measure, the Government will undertake stability measures through the use of appropriate instruments.
The minister was speaking in Parliament yesterday when he delivered a ministerial statement on the depreciation of the local currency.
“Further, Government will ensure that it consolidates its fiscal position to avoid fiscal slippages that have an adverse impact on the monetary side and stability of the exchange rate. To this effect, Government will ensure prudent levels of fiscal deficits going forward,” he said.
Speaker of the National Assembly Patrick Matibini ordered Mr Chikwanda during the week to issue a comprehensive statement following a point of order raised by MMD Chadiza Member of Parliament Allan Mbewe.
Mr Chikwanda said the fall of copper prices, which has resulted in the decline in production levels, had shocked the financial market as the mines contributed 70 per cent of the country’s foreign exchange.
Although non-traditional exports increased over the past few years, the magnitude earned from this segment has not been enough to moderate pressures on the Kwacha.
Similarly, Mr Chikwanda said that the global economy was at its weakest pace since the economic and financial crises of 2008/09 as mounting weakness continued in major economies ranging from China to the Eurozone.
As a long-term measure, Mr Chikwanda told Parliament that the Government was taking steps to diversify the economy, particularly through the agriculture and energy sectors where short-term gestation projects had been targeted.
The minister assured that the Government was committed to maintaining a free-floating exchange rate, although it would like to see different players in the economy support Government measures.
Mr Chikwanda said private individuals and as well as banks and the business community should support the Government’s efforts aimed at stabilising the Kwacha because the consequences of the volatility would be felt by everyone.
The Government was aware of the difficulties that the volatility of the exchange rate has had on the business community and the general public at large.
“We do share in the disruptions that this has had on business activity, operational costs rising and challenges that are faced with respect to planning,” Mr Chikwanda said.
“On the Government’s side, the depreciation of the local currency entails that the treasury is required to provide for more Kwacha to service its foreign obligations.”
He said that the reallocation of resources in the Budget has had an effect on provisions in equally important areas which had negatively impacted on other programmes, particularly those that were of poverty reduction in nature.