CB Circular 21/2002: Statutory Reserve Ratios

The Bank of Zambia has raised the minimum statutory reserve ratio on Kwacha and foreign currency deposit liabilities from 15 percent to 17.5 percent. This 2.5 percentage point increase becomes effective on December 26, 2002, to contain excessive money market liquidity and curb emerging inflationary pressures. The central bank maintains the authority to adjust these ratios further as necessary to manage macroeconomic stability.

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BANK OF ZAMBIA

OFFICE OF THE DEPUTY GOVERNOR – OPERATIONS

December 13, 2002

CB Circular No. 21/2002

To: All Commercial Banks

STATUTORY RESERVE RATIOS

Kindly refer to CB Circular No. 27/2001 dated 26th November 2001.

Commercial banks are hereby advised that the minimum statutory reserve ratio on deposit liabilities (both Kwacha and foreign currency) has been revised upwards by 2.5 percentage points from 15 % to 17.5 %.

The new statutory reserve ratio of 17.5 % takes effect on Thursday, 26th December 2002.

This measure has been necessitated by the need to contain the current excessive growth in money market liquidity and the build up in inflationary pressures in the economy. Therefore, the Bank of Zambia stands ready to make necessary adjustments to the ratios.

Denny H Kalyalya (Dr)
DEPUTY GOVERNOR - OPERATIONS

Bank Square, Cairo Road, PO Box 30080, Lusaka 10101, Zambia Tel: 260-1-226844, Fax: 260-1-237070, email: dkalyalya@boz.zm