ZAMBIA’S intention to pay debt to China in yuan will help the country diversify away from a single currency and reduce pressure on the deteriorating dollar reserves.
This is according to the Economics Association of Zambia (EAZ) president, Lubinda Haabazoka.
Dr Haabazoka explained that Zambia stood to win if China allowed the country to service the debt owed in Chinese Yuan.
Finance Minister, Margaret Mwanakatwe, announced that Government would this month engage China on possibilities of servicing the debt it owed to that country in its currency.
Dr Haabazoka said this would favour Zambia as most of its trade was with China.
He was speaking in an interview at the weekend.
“This is a positive move. The advantage for Zambia is that it is going to help us diversify away from a single currency, instead of us looking for dollars to import goods and to service debt such as multilateral and Eurobonds and Chinese, we are going to use the Chinese currency.
“Mind you, when you are servicing debt, Government collects revenue in Kwacha then buy foreign exchange. We are going to have diversified currencies to use for reserves,” Dr Haabazoka said.
The move, Dr Haabazoka said, would enable Government save enough to caution the dwindling foreign reserves.
Dr Haabazoka also observed the need to engage more foreign currencies such as the rand, Euros and Pounds.
“Zambia is going to help release pressure on having to look for dollars; we are going to caution the deterioration of dollar reserves.
“With the kicking on Sales Tax on 1st April, we expect increased foreign exchange inflows because our mining will be forced to bring in foreign exchange to fund their operations within Zambia thereby correcting reserves that are dwindling,” he said.