Lending rate maintained at 9.75 percent for the third quarter of 2018

Dr. Denny Kalyalya BoZ Governor

The Bank of Zambia (BoZ) Monetary Policy Committee (MPC) has maintained the Country’s benchmark lending rate at 9.75 percent for the third quarter of 2018.

In arriving at this decision during its November 19th and 20th meeting, the MPC took into consideration the inflation projection, which is expected to remain outside the upper bound of 6-8% target range.

Speaking during a third quarter media briefing, Central bank Governor, Denny Kalyalya says the MPC also took into consideration the continued low economic growth, with heightened downward risks.

Dr. Kalyalya states that low private sector credit growth, though picking up, was equally a factor in maintaining the policy rate at 9.75 percent.

He notes that the Monetary Policy Committee was also mindful of the sustained high fiscal deficits and the continued fragilities in the financial sector as reflected in high non-performing loans.

And Dr. Kalyalya has disclosed that Zambia’s gross international reserves declined to US$ 1.63 billion, at end of September 2018, representing 1.9 months of import cover.

He says this decline is from US$ 1.82 billion, which represented 2.2 months of import cover, recorded at the end of June 2018.

Dr. Kalyalya says in order to build international reserves through purchases of foreign exchange and mineral royalty tax receipts , cumulative purchases  amounted to US$345 million by September 2018.

Meanwhile the Central Bank Governor says Zambia’s real Gross Domestic Product (GDP) is projected to grow by 4.0 percent in 2018.

He says the projected growth is premised on positive performance in construction, information and communication, electricity, manufacturing and mining sectors.