President Edgar Lungu In Trouble With IMF Over Dismissal Of Reserve Bank Governor

International Monetary Fund (IMF) has expressed concern about the president of Zambia dismissing the governor of the country’s central bank, just days after a cut in interest rates alongside a warning about the country’s economic problems.

President Edgar Lungu fired Denny Kalyalya on Saturday, without giving a reason and replaced him with a former deputy finance minister, Christopher Mphanza Mvunga, a close ally.

The ousted central bank head has been credited with stabilising the Zambian economy.

The IMF believes that stability in developing countries has relied on the increased independence of central banks from government.

In a statement the fund said: “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.”

The summary dismissal of the governor of the Bank of Zambia also provoked criticism from South Africa’s Finance Minister Tito Mboweni, who demanded an explanation.

In a message posted on Twitter he said: “Presidents in Africa must stop this nonsense.”

However, that attracted a reprimand from the South African President, Cyril Ramphosa, who assured the Zambian government that the finance minister’s “unfortunate remarks do not reflect the views” of the government.

Tito Mboweni admitted his criticism of the president of Zambia had got him into trouble, but he refused to back down saying “central bank independence is key, not negotiable.”

That view from South Africa echoes the concerns of the IMF, about the independence of the Bank of Zambia from the government.