Bank of Zambia governor sacked by president

25 Aug 20

Bank of Zambia governor Denny Kalyalya was sacked by Zambian president Edgar Lungu over the weekend, as the country continues discussions with the International Monetary Fund.

The dismissal was confirmed by the country’s government on Saturday, with deputy secretary to the Cabinet Christopher Mvunga replacing Kalyalya.

The Zambian Government did not give a reason for the dismissal, which came in the middle of talks with the IMF over emergency support to help reduce the effects of Covid-19.

In a statement on the sacking, the IMF said: “The macroeconomic stability that most developing countries have enjoyed in recent years has greatly relied on the much-improved effectiveness and increased independence of central banks”.

“It is imperative that central banks’ operational independence and credibility is maintained, particularly at this critical time when economic stability is threatened by the Covid-19 pandemic.”

In June, Zambia entered discussions with the IMF to request emergency support under the Rapid Credit Facility, which offers financial support to low income nations in an emergency. 
Growth in the country is forecast to contract by 5% this year, “substantially lower” than expected at the beginning of the year, the IMF said.

It added this means the number of people living in extreme poverty is expected to increase, as fiscal pressures in 2020 have increased due to significantly lower revenue collections and higher spending needs.

At the end of meetings in July, Dhaneshwar Ghura, division chief of the IMF, said: “Discussions will continue as the authorities determine their policies and priorities in the formulation of the revised 2020 Budget, as well as the medium-term fiscal stance needed to restore debt sustainability, revive growth and lower poverty.”

The move to sack Kalyalya was criticised by South African finance minister and former governor of the South African Reserve Bank Tito Mboweni.

In a tweet he said: “Presidents in Africa must stop this nonsense of waking up in the morning and fire a central bank governor.”

In further tweets, since deleted, Mboweni threatened that he would mobilise support if the governor was not reinstated.

One read: "The governor was a good fella. Why do we do these things as Africans. The president of Zambia must give us the reasons why he dismissed the governor - or else hell is on its way. I will mobilise".

South Africa president Cyril Ramaphosa, strongly reprimanded the Mboweni, following his social media comments.

A statement said: “President Ramaphosa wishes to assure the government and people of the Republic of Zambia that the unfortunate remarks do not reflect the views of the South African Government and its people. 

“The issue is being addressed to ensure that such an incident does not occur again.”

In May, Zambia hired asset management company Lazard help it restructure its external debt, the finance ministry said.

At the end of December, the nation had about $11.2bn of external debt.

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