Operational independence of central bank ‘II ensure credibility ~IMF
The International Money Fund (IMF on Monday called for the maintenance of operational independence and the credibility of central banks in developing countries to ensure macroeconomic stability.
In its response to the sack of the governor of the central bank of Zambia by the president over the week, the Fund said most developing countries have enjoyed stable macroeconomic environments in recent years due to the much-improved effectiveness and increased independence of central banks.
The IMF said without credible institutions and sound policies, sustained economic growth and much-needed improvements in living standards will not be possible.
Detail of the statement:
“We note the change in leadership announced over the weekend at the Bank of Zambia before the end of the previous Governor’s mandate.
“The macroeconomic stability that most developing countries have enjoyed in recent years has greatly relied on the much-improved effectiveness and increased independence of central banks.
“It is imperative that central banks’ operational independence and credibility is maintained, particularly at this critical time when economic stability is threatened by the COVID-19 pandemic.
Without credible institutions and sound policies, sustained economic growth and much needed improvements in living standards will not be possible.”
Zambian President Edgar Lungu on Saturday summarily dismissed central bank governor Denny Kalyalya and replaced him with former deputy finance minister Christopher Mphanza Mvunga.
“President Lungu has terminated the contract of Bank of Zambia governor Dr Denny Kalyalya with immediate effect,” said the statement, which did not provide reasons for the dismissal.
Kalyalya, who previously served as a World Bank executive director, was appointed in February 2015 and had his contract extended in 2018 until 2023.