The International Monetary Fund (IMF) has raised concerns over Zambia’s proposed de-dollarization initiative, highlighting potential risks to inflation control efforts. According to the IMF, Zambia’s current economic conditions are not conducive to de-dollarization, as the country lacks the low and stable inflation rates necessary for such a transition.
This warning follows the Bank of Zambia’s proposal to promote the use of the local currency and introduce severe penalties for businesses demanding US dollars for local transactions. The Central Bank has suggested penalties, including imprisonment for up to 10 years, for violators.
The IMF’s caution underscores a significant push and pull between the institution and Zambia regarding the best path forward for the country’s economy. While the Bank of Zambia aims to strengthen local currency use, the IMF stresses the importance of achieving economic stability first.
This development poses a critical question: should Zambia proceed with de-dollarization despite potential inflation risks, or should it heed the IMF’s advice and focus on stabilizing its economy first? The outcome of this debate will have a significant impact on Zambia’s economic future.
Source: DW Africa
