CSPR raises concerns over Zambia's Monetary Policy Direction

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The Civil Society for Poverty Reduction (CSPR) has expressed concerns over the recent monetary policy direction announced by the Bank of Zambia.

The policy, which aims to control inflation, has raised the Monetary Policy Rate (MPR) to 14.5%, up from 14.0%.

However, CSPR Executive Director Isabel Mukelebai has argued that this move may have unintended consequences, particularly for households and Small and Medium Enterprises (SMEs).

According to Ms. Mukelebai, the increased MPR will lead to higher loan costs, reducing household disposable incomes and exacerbating the already rising cost of basic needs.

Furthermore, Ms. Mukelebai says the policy may stifle SME growth, job creation, and their contribution to the economy.

The CSPR Executive Director is questioning the effectiveness of the M-P-R as a tool to curb inflation, which has been on the rise despite repeated increases in the MPR over the past three years.

Ms. Mukelebai has callied for a more comprehensive approach to address the underlying causes of inflation, including supply-side constraints and foreign exchange dynamics.

She said Key concerns include Impact on Households, SME Growth,Inflation and Monetary Policy Approach.

Ms. Mukelebai has since recommended for favorable policies to attract local and international investment in key sectors, enhancing national output and forex inflows via exports.

She has noted the need for the government to strengthen legislation to curb illicit financial flows and broaden the implementation of export proceeds tracking frameworks and provide a clear roadmap for the implementation of the de-dollarization policy to avert rapid depreciation of the local currency.

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