Zambian Kwacha Overtakes Russian Ruble As World’s Best Performing Currency In 2022 – BitcoinKE
The Zambian kwacha overtook the Russian ruble to become the best performing currency in the world as of September 1, 2022.
Zambia’s official currency bucked the trend of depreciating currencies in Africa over the past 12 months and was pushed to world-best after confirmation of a $1.3 billion relief package to help the country emerging from years of economic mismanagement.
According to an IMF statement, the package will contribute to the government’s reform plan. Plan features include:
- Restoring debt sustainability
- Create fiscal space for much-needed social spending
- Strengthen economic governance.
The news of the confirmation was greeted with joy across the country, as the kwacha reportedly gained 3.1% in one day. President Hakainde Hichilema took to Twitter to explain their intentions with the ease that followed the IMF’s assessment of their plans:
We want to reduce and limit debt to sustainable levels. A few months ago, we were unable to repay our debt. This plan ensures we stay within external and domestic debt limits, so we can spend more money on the growth side of the equation. #8NPD #EconomicTransformation pic.twitter.com/O30xMN55VF
— Hakainde Hichilema (@Hhichilema) September 1, 2022
“The timely conclusion of restructuring agreements with external creditors will be essential for the successful implementation of the new ECF arrangement,” says the IMF.
The agreement with the IMF (International Monetary Fund) follows an agreement at the end of July 2022 with China and France to negotiate the restructuring of the country’s debt:
“The Bank of Zambia should continue its efforts to reduce inflation and preserve financial stability. International reserves should be replenished when conditions permit and the exchange rate should continue to reflect market conditions. It will also be important to address high NPL levels and ensure adequate capital buffers. – IMF
In the past 12 months, inflation has fallen by 12 percentage points, a situation which has been praised by the new government which took power in August 2021.
Zambia is one of the best performers on the continent when it comes to inflation management. Inflation fell to 9.8% in August 2022 from 9.9% the previous month.
The Central Bank of Zambia has forecast inflation to average 11.4% in 2022 and eventually drop to single digits in 2023 as it expects the rate to return to a target range of 6% and 8% by 2024.