Central Bank governor, Kalyalya, says de-dollarisation policy not about forex market controls

The Bank of Zambia (BoZ) has clarified that its proposed de-dollarisation policy will not involve exchange market controls.

Central Bank Governor Danny Kalyalya emphasized that the policy aims to adhere to legal provisions making the Kwacha Ngwee the sole legal tender in Zambia, without imposing new controls on currency exchange.

Speaking at a mid-term budget performance review on Wednesday, Kalyalya explained that the BoZ is currently in the consultation phase for the policy and has not yet implemented it.

He addressed public confusion by stressing that the policy was still a draft and invites public input.

“The draft currency regulation is under consultation. We want to ensure people understand that we have not made a final decision and are open to feedback,” Kalyalya said.

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He clarified that the de-dollarisation policy is not a blanket ban on foreign currencies but rather a measure to reinforce the Kwacha’s status as the official currency.

Kalyalya distinguished between de-dollarisation and full-scale discontinuation of foreign currency use. “De-dollarisation refers to reducing reliance on foreign currencies like the Euro, South African Rand, British Pound, and Chinese Yen in favor of the Kwacha.

However, this does not mean we are removing the ability to hold or use these currencies altogether,” he stated.

Addressing concerns from the International Monetary Fund (IMF), Kalyalya noted that while the IMF has raised issues about the policy’s implications, it has not indicated that the policy violates any agreements.

He reiterated that the goal is to enforce the Bank of Zambia Act, which designates the Kwacha as the sole legal tender, without introducing exchange controls.

Kalyalya urged stakeholders to engage with the consultation process to ensure their views were considered.

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