MAINTAINING MPR AT 9% SHALL BOOST ECONOMIC ACTIVITIES IN THE COUNTRY- ZUFIAW
24th August 2022
The Zambia Union of Financial Institutions and Allied Workers (ZUFIAW) has noted that the decision to maintain the Monetary Policy Rate at 9% shall boost economic activities in the Country. The General Secretary of the Union Mr. KASAPO SUNDREA KABENDE was speaking after the Bank of Zambia announced that the Monetary Policy Committee (MPC) decided to maintain the Monetary Policy Rate at 9.0 percent, at its February 14-15, 2022.
“Maintaining the MPR at 9% shall promote an increase in the appetite to borrow amongst economic players and businesses in the Country. It also gives confidence to Investors and stakeholders that Government through the Central Bank desires to promote a lower cost of borrowing to boost economic activities and accelerate growth. If businesses can borrow at consistently lower rates, their spending on capital goods shall go up, enabling them to expand their operations and subsequently create jobs. This aggregated action by the business community helps the economy’s long-term performance and can help spur household expenditure on consumer goods.” He said.
“Further, commercial banks can plan better and this also improves their capacity to lend. High volatility of interest rates increases the cost of lending and borrowing and many players in the economy tend to reduce their exposure to this risk and wait for the rates to stabilize. This situation is highly detrimental to the Country’s economic growth.” He noted.
Mr. KABENDE stated that in the past few months, the Kwacha has continued to gain against other major currencies, the rate of inflation decreased and the Country recorded a decline in economic output over the past two years due to the covid-19 pandemic and the 2021 elections. It was therefore imperative for the Central Bank to lower and maintain low interest rates and make borrowing cheaper. The government now has the challenge to promote several other possible expansionary policy tools.
“However, to fully promote economic growth in the Country, there is a need for commercial banks to introduce packages with lower short-term interest rates for small and medium scale businesses. This shall encourage these businesses to borrow and run their operations. This situation needs to be coupled with the reduction of the reserve requirements by the Central Bank to free up more resources for Banks to use for lending.” He said.
Mr KABENDE affirmed that in line with the values of the Union, ZUFIAW will continue to promote hard work among the membership to ensure business growth in the affiliate institutions which will translate in better conditions of service.
Kasapo Sundrea Kabende