EXTERNAL DEBT MANAGEMENT NEEDED TO STABILIZE KWACHA – DR. KAPASA

Texila American University (TAU) Head of Business  Dr Agape Kapasa says Zambia should manage its external debt if it is to stabilize the perfomance of the Kwacha against major currencies and boost investor confidence in the country.

Speaking in reference to the recent revelations by the Bank of Zambia Governor regarding the depreciation of Zambia’s currency against major currencies, Dr Agape Kapasa said management of external debt should be made the first priority.

He said there was need to re-analyse the nation’s trade agreements and create strong export industries in the country in order to accelerate revenue collection which will then translate to an upsurge in demand for the local currency.

Dr Kapasa said a substantial increase in the country’s exports in comparison to imports is important to stabilize the Kwacha.

“There should be a boost in the nation’s exports, an increase in total productivity and inflation rate should be lowered,” he said.

He bemoaned the potential loss of foreign investment in Zambia’s market as it seems risky to investors.

Dr Kapasa warned that the long-term impact of inflation could be more damaging to the standard of living in Zambia than a recession.

“Even though expansionary monetary policy is effective in adding more liquidity in a recession and results in a boost to economic growth by lowering interest rates, over a long period it could lead to high inflation. Therefore, it is recommended that a national timeline be created for detailed analysis of necessary changes,” Dr. Kapasa said.

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