The Bank of Zambia has defended its de-dollarization plans while also seeking input from stakeholders who oppose the proposal. Central bank governor Denny Kalyalya clarified that the bank is not proposing anything new but aims to enforce existing laws designating the kwacha as the sole legal tender for domestic transactions.
De-Dollarization and Stakeholder Involvement
The Bank of Zambia (BOZ) announced that the country will carefully implement the proposed ban on using U.S. dollars for local transactions. Kalyalya emphasized that the bank actively seeks input from stakeholders, including opponents of the proposal, before making a final decision.
A recent report indicates that the BOZ is soliciting feedback from stakeholders regarding its widely criticized de-dollarization plans. The International Monetary Fund (IMF) is among the organizations expressing reservations about punishing those who fail to comply with regulations promoting the use of the kwacha.
IMF and Business Community Concerns
Eric Lautier, the IMF’s Zambian representative, recently noted that the plan could be counterproductive and might undermine efforts to control inflation. Zambian business organizations have also criticized the de-dollarization plans, prompting a response from the BOZ governor.
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Reinforcing Existing Laws
Kalyalya emphasized that the central bank is fulfilling its legal mandate by enforcing laws that designate the kwacha as the sole legal tender for domestic transactions. “We have noted a frenzy of people going out to the media saying we are discouraging the use of the dollar. That is not the case; we just want to reinforce the law,” Kalyalya stated.
Strengthening Monetary Policy
In addition to enforcing existing laws, the BOZ hopes to use the proposed regulations to strengthen the implementation of monetary policy. Kalyalya expects that implementing the proposal will enhance the stability of Zambia’s financial system.
Kalyalya disclosed that the BOZ is still gathering views and urged stakeholders to accept the outcome of the consultation process. The central bank remains committed to considering all input before finalizing its decision on de-dollarization.
