Zambian President Edgar Lungu fired the country’s central bank governor Denny Kalyalya last week sparking fears that government wants to end the institution’s independence. Kaylalya was immediately replaced by Christopher Mvunga who reportedly has close ties to the President.
The abrupt decision, which sent shockwaves across Zambian financial markets, saw the country’s currency, the Kwacha shedding 0.7% against the greenback to reach an all-time low of 19.20 kwachas to a single U.S. dollar. Since the start of the year, the Kwacha depreciated by more than 25%.
According to a report, the President’s decision came as Zambia, which is the world’s second-largest producer of copper, is expecting its economy to contract by 4.2% in 2020.
Although no official reason has been given for the sacking, many experts believe that President Lungu wants to fight the effects of the global pandemic Covid-19 economy with increased spending. The closure of the economy has curbed the country’s revenue inflows.