South Africa

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Mboweni blasts Zambian president for firing the country’s central bank governor

Mboweni blasts Zambian president for firing the country’s central bank governor
SA Finance Minister Tito Mboweni. (Photo: Dwayne Senior / Bloomberg via Getty Images)

Zambia has vowed to officially protest against Finance Minister Tito Mboweni’s ‘immature and improper criticism’.

Finance Minister Tito Mboweni has tweeted up a diplomatic storm by sharply rebuking Zambian President Edgar Lungu for firing the country’s central bank governor.

Lungu abruptly terminated Bank of Zambia governor Denny Kalyalya’s contract on Saturday with immediate effect, but without explanation. However, Zambians believe it was because he was trying to rein in inflation and was also frank about the weakness of the economy.  

Mboweni, a former governor of the SA Reserve Bank, tweeted on Sunday that, “Presidents in Africa must stop this nonsense of waking up in the morning and fire a Central Bank Governor! You cannot do that. This is not some fiefdoms of yours! Your personal property?! No!!”

“No. That Governor was a good fella,” Mboweni continued. “Why do we do these things as Africans. The President of Zambia must give us the reasons why he dismissed The Governor or else hell is on his way. I will mobilize!”

The Zambian government’s chief spokesperson, Minister of Information and Broadcasting Services Dora Siliya, responded angrily by tweeting:

“We are very surprised with Tito Mboweni’s immature and improper criticism of a sovereign decision by Zambia. 

“The Minister should be attending to COVID problems facing the South Africans, our focus here. We will pursue matter diplomatically.”

Mboweni, unrepentant, tweeted right back:

“Looks like I am in trouble about my statement on the dismissal of the Bank of Zambia Governor! 

“I stand by my statement. Central Bank independence is key. Not negotiable. Let all central bankers speak out!” 

Later he tweeted:

“You know.  Trouble makers are game changers! I am glad that I am a TROUBLE MAKER!”

Lungu announced he had replaced Kalyalya as Bank of Zambia (BoZ) governor with Christopher Mvunga, the deputy secretary to the Cabinet, responsible for finance and economic development. The appointment was subject to ratification by the National Assembly, Lungu’s statement said.

This change was “like replacing an experienced heart surgeon with a mechanic, in the middle of heart surgery,” Zambia’s main opposition leader, Hakainde Hichilema, leader of the United Party for National Development (UPND), posted on Facebook.

The IMF would now stop engaging with Zambia – also because of the country’s poor fiscal policies – and the kwacha would go into free fall, he said.

He added Kalyalya had been fired because he was “professional, ethical and above board” and had tried to prevent the kwacha free falling against major currencies, while Finance Minister Bwalya Ng’andu had been working against him, including by contracting new debt. 

It was important for the BOZ governor to be free from political interference by the executive – as had just happened, Hichilema said. 

A Zambian journalist told Daily Maverick that Mvunga was very unlikely to emulate Kalyalya’s independent monetary policy.

“He’s Lungu’s bootlicker,” the journalist said. 

Sunday Chanda, media director of the ruling Patriotic Front party, suggested Kalyalya had been fired because he had only disbursed one billion kwacha of an intended 10-billion-kwacha stimulus package, despite the economy experiencing negative growth.

This, along with other “stringent” financial measures implemented by Kalyalya had created a liquidity problem. 

“This was clearly suspected sabotage to knock out the economy completely which was what the UPND was banking on,” Chanda said, adding that Kalyalya was Hichilema’s cousin. 

Some Zambian observers believe that Kalyalya’s remarks at a regular quarterly briefing on Wednesday 19 August may have been the final straw for Lungu. 

He said Zambia’s economic conditions during the second quarter of this year had worsened and prospects for growth were weak, according to the Lusaka Times

He blamed the country’s economic ills on a substantial decline in consumer demand, wholesale and retail trading. And he projected a 4.2% contraction in GDP, worse than the previous forecast of 2.6% contraction.

He said the sharp rise in the number of Covid-19 cases had had a negative impact on Zambia’s economy.

Kalyalya projected that inflation would decline, but also said there was a need to adjust macroeconomic fundamentals and debt sustainability to achieve economic stability in the country. DM

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