THE Bank of Zambia (BoZ) has revealed that the mining sector has remained Zambia’s biggest source of foreign exchange and has massively helped to strengthen the Kwacha against the US dollar and other currencies.
Speaking at a media briefing in Lusaka yesterday, BoZ governor Dr. Denny Kalyalya said the mining sector is also part of the factors contributing to the falling inflation.
He revealed that despite a slight reduction in direct sales, mining companies continued to inject significant dollars into the economy and tax payments from the sector almost doubled in the fourth quarter of 2025.
“Despite a slight reduction, the mining sector still sold over USD400 million directly to the market. Their tax payments nearly doubled to US$344.6 million, ” he said.
He explained that total foreign exchange supply by the mining sector increased to US$759.4 million in the fourth quarter, up from US$636.8 million in the previous quarter.
Be said the increased dollar supply helped the Kwacha gain strength.
“The Kwacha appreciated further by 4.1 percent against the US dollar to K22.80 in the last quarter of 2025 and it has appreciated by 14.2 percent so far, ” he said.
According to the Governor, higher copper prices, a sovereign credit rating upgrade and the Staff Level Agreement with the International Monetary Fund (IMF) also supported confidence in the market.
He explained that the stronger Kwacha has helped reduce the cost of imports and contributed to the falling inflation.
Meanwhile, Bank of Zambia has also reduced the monetary policy rate from 14.25 percent to 13.5 percent due to the maize bumper harvest of the 2024-2025 farming season.
He explained that the reduction is also due to the recent reduction of inflation which has since seen a single digit of 9.4 percent.
He stated that inflation is predicted to reach the 6_8 percent target band by the second quarter of this year.
“Overall inflation declined to 11.2 percent in December 2025 from 12.3 percent in September 2025. In January 2026, inflation fell sharply to 9.4 percent, ” he said.
Drop in inflation means prices are still going up, but not as fast as before.
Dr. Kalyalya said the drop in inflation was also mainly due to a good maize harvest and a stronger Kwacha.
Source: Kalemba 12.02.24
