Central Banks
IMF Says Zambia’s Dedollarization Plan May Be Ineffective
- Zambia wants to curb local dollar use to fight inflation
- Businesses have raised concerns over ‘punitive’ measures
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Zambia’s proposed ban on charging foreign currency in local transactions — punishable with 10-year jail terms — might defeat its own purpose, according to the International Monetary Fund.
The central bank of Africa’s second-biggest copper producer in June unveiled the plans to curb increasing dollarization in the economy that it said blunts its tools to fight inflation. Businesses have already pushed-back on proposed regulations calling them “punitive” and warning that they may actually fuel price growth.