Before 2021, it was understood that the exchange rate was pulled by the excessive debt Zambia had borrowed in a short period of under 7 years, beginning 2011 to around 2020. The amount was more than USD12 billion. The last time Zambia had accumulated such high debt was over a period of 17 years beginning in the 1970s to the mid-late 1980s. That amount was USD 7.9 billion. In the pre-2021 period, it was consensus that the high demand for foreign currency partly led to the depreciation of the local Kwacha, this created undue external pressure from international lenders. Remarkably, the technocrats at Ministry of Finance and the Central Bank kept the domestic economy afloat by ensuring that liquidity was available in the financial market for borrowing and other activities. It is important to make this distinction because a large part of the pressure to repay was driven more by perception and fear. This is […]
