By Jane Chanda
The Civil Society for Poverty Reduction (CSPR) is concerned that the government’s ambitious target of maintaining inflation within the 6-8 percent band may not be achievable, given the Monetary Policy Rate (MPR)’s significant increase in the last three years.
The Bank of Zambia (BoZ) recently raised the MPR to 14.5 percent from 14.0. The rate has been sharply rising over the past two years, starting at 9.25 percent in the first quarter of 2023.
In an interview with Daily Revelation, CSPR executive director Isabel Mukelabai questioned the effectiveness of the MPR adjustments by BoZ over the last three years as a measure to control inflation.
She said the BoZ’s recent frequent adjustments of the MPR signaled a significant shift in the country’s monetary policy approach.
“The recent increases in MPR over the years have produced mixed results,” Mukelabai said.
She emphasised the need for alternative measures to address inflation, and urged the government to adopt supply-side response measures, including favourable policies to attract local and international investment in key sectors.
Mukelebai also called for strengthened legislation to curb illicit financial flows and the implementation of an export proceeds tracking framework.
“The government needs to broaden and strengthen the implementation of an export proceeds tracking framework and provide a clear roadmap for the implementation of the de-dollarisation policy,” she said.
Mukelabai stressed the importance of addressing the root causes of inflation, rather than relying solely on monetary policy adjustments.
She further highlighted the need for a comprehensive approach that incorporated fiscal policy, economic growth strategies, and social protection programs.
