LUSAKA - Zambia is seeking help from the International Monetary Fund, after its currency kwacha lost about a fifth of its value and prices of its key export commodity copper slumped, the Fund said Friday.
The “recent steep depreciation of the kwacha is raising inflationary pressures and expansionary fiscal policy has created large budgetary imbalances,” said the fund in a statement, after a visit by a team of its experts to the country. “The authorities have requested the IMF team to return in early September to discuss an economic programme that can be supported by a fund arrangement,” it said.
The kwacha slumped 18 percent in the past half year, sending inflation soaring in Africa’s second biggest copper producer. Combined with a fall in the price of its key export commodity copper, that has made servicing the country’s foreign debt more costly for the government.
Zambia scrapped restrictions on the use of the dollar and other foreign currencies this year as it tried to halt the slide in its currency.
“The IMF is working closely with the Zambian authorities to develop a plan that will anchor macroeconomic stability,” the fund said.