The Bank of Zambia – BoZ Governor […]

The Bank of Zambia – BoZ Governor says the government’s recent announcement of a K26.3 billion supplementary budget is being hailed as a necessary step to address mounting economic challenges, including rising fuel prices and other fiscal pressures.

While some experts have expressed concerns over the negative potential impact on the economic achievements so far, such as 6.8% inflation, $6.5 billion in international reserves, and a 14.8% appreciation of the Kwacha, BoZ Governor Dr. Denny Kalyalya emphasized the importance of fiscal flexibility in sustaining economic stability.

 speaking during the BoZ’s first quarter media briefing, after the Zambian Business Times (ZBT) queried whether the supplementary budget could undermine recent economic progress. In response, Dr. Kalyalya described the move as a careful balancing act designed to pre-empt more serious economic disruptions.

“The government issuing the supplementary budget is a tradeoff that must be done. If these challenges are not addressed, they could trigger serious economic issues,” he explained.

 He noted that the Monetary Policy Committee took the supplementary budget into account when deciding to reduce the monetary policy rate. “All these aspects were considered when the committee made its decision and in all projections, as we checked the models thoroughly,” Dr. Kalyalya said. “The projections were not done lightly.” Dr. Kalyalya clarified that supplementary spending is not inherently problematic unless the funds are allocated to unplanned or non-value-adding expenditures.

 “A supplementary budget on its own is not a problem, but if you spend that money on things that do not add value to the country, that’s where the problem starts,” he said.

 He further stressed that the goal should not be to hold back progress out of concern for preserving past gains. “You can’t hold back progress just to preserve what you have achieved. The budget is meant to address new challenges, and failing to do so could have adverse effects on the economy.” Dr. Kalyalya concluded that the supplementary budget is well within the context of strengthening Zambia’s economic system and ensuring that emerging issues are addressed proactivel

Article by Justine Phiri