The Zambian Kwacha has surpassed the Russian Ruble to become the world’s best-performing currency in the world as of 1st September 2022.
Zambia’s official currency has bucked the trend of depreciating currencies in Africa over the last 12 months and was pushed to the best globally following confirmation of a $1.3 billion relief package to assist the country that is coming out of years of economic mismanagement.
According to a statement by IMF, the package will help with the government’s reform plan. Features of the plan include:
- Restoring debt sustainability
- Create fiscal space for much-needed social spending
- Strengthen economic governance.
News of the confirmation was greeted with joy across the country as the Kwacha reportedly gained 3.1% in a day. President Hakainde Hichilema took to Twitter to elaborate on their intentions with the facility that came after IMF evaluated their plans:
We want to reduce and restrict debt within sustainable levels. Few months ago, we were out of line with our debt. This plan ensures we stay within line, external and domestic debt, so that we can spend more money on the growth side of the equation. #8NDP #EconomicTransformation pic.twitter.com/O30xMN55VF
— Hakainde Hichilema (@HHichilema) September 1, 2022
“Securing timely restructuring agreements with external creditors will be essential for the successful implementation of the new ECF arrangement,” IMF said.
The IMF (International Monetary Fund) deal follows an agreement in late July 2022 with China and France to negotiate the restructuring of the country’s debt:
“The Bank of Zambia should continue its efforts to reduce inflation and preserve financial stability. International reserves should be replenished as conditions allow and the exchange rate should continue to reflect market conditions. Addressing high NPL levels and ensuring adequate capital buffers will also be important.” – IMF
In the last 12 months, inflation dropped by 12 percentage points, a situation that has drawn plaudits for the new government that came to power in August 2021.
Zambia is one of the best-performing countries on the continent when it comes to inflation management. Inflation declined to 9.8% in August 2022 from 9.9% the previous month.
The Central Bank of Zambia has projected that inflation will average 11.4% in 2022, and eventually drop to single digits in 2023 as it expects the rate to go back within a target range of 6% and 8% by 2024.
