Zambia: Kwacha Rebasing Good, National Bank Assures ‘Doubting Thomases’
THE Bank of Zambia (BoZ) has assured the public still sceptical of the benefits of the soon-to-be-rebased Kwacha that macro-economic indicators are in favour of a rebased currency as Zambia is currently one of the world’s fastest growing economies.
The central bank was allaying fears raised by members of the public in Northern Province who said the planned rebasing of the Kwacha was futile as Zambia could still head back to the era of hyper-inflation.
At public meetings held in Mbala and Mupulungu, the public also questioned the BoZ delegation currently in the province on a sensitisation campaign on rebasing of the Kwacha the benefits of the conversion.
Delegation leader Penelope Mapoma and senior team member Ernest Chisongo said the inflation rate had been sustained at single digit levels for the past five years and Gross Domestic Product (GDP) growth was higher by international standards.
“Inflation which diminishes the value of a currency is under control. There is a positive economic outlook because of marked increase in foreign direct investment and we have recorded back-to-back bumper harvests,” Mr Chisongo said.
Cross-border traders who seemed perplexed at the rebasing concept wanted to know if foreign exchange rates would be affected.
Mr Chisongo, however, said the exchange rate was also subject to rebasing while the purchasing value of the rebased Kwacha would remain the same.
Ms Mapoma asked high school pupils whose homes were in outlying villages to inform their guardians to take advantage of this period to open accounts they could use to change the current notes with the rebased ones once the conversion was enforced on January 1, 2013.
She discouraged villagers in the habit of hoarding money to desist from the practice and ensure they exchanged current notes for the new ones before the window set by the central bank to take in old notes closes.
Mr Chisongo said hoarding money in homes was bad because it affected allocative efficiency by preventing money from being used for productive activities by economic agents.
The new notes will be in circulation on January 1 and a six-month window would be given in which people would be able to transact using the current and rebased notes after which transactions would only be done using rebased notes.
Those still in possession of the current notes after the six-month period elapses would have to travel to Bank of Zambia offices in Ndola or Lusaka to change them.
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