Zambian President Edgar Lungu drew criticism after replacing central bank Governor Denny Kalyalya, who had been seen as a steady hand even as inflation soared.
The president on Saturday appointed Christopher Mvunga, who was a deputy secretary to the cabinet and previously served Lungu as deputy finance minister. He takes over as inflation lingers near 16% and the economy is set to contract 4.2% this year. He’ll also have to contend with a currency that’s the world’s second-worst performer this year, having depreciated by nearly 26% against the dollar.
Lungu didn’t give a reason for replacing Kalyalya, who had repeatedly called for the government to cut the fiscal deficit amid ballooning debt and falling foreign-exchange reserves. Kalyalya’s dismissal could raise concerns among investors who saw him as a credible governor that tried to keep a spendthrift government in check. Lungu in 2018 extended Kalyalya’s contract for five years.
“It is quite surprising because Dr. Kalyalya has performed sterlingly under very extreme circumstances,” Trevor Simumba, an economist based in Lusaka, the capital, said by phone. “To fire him in this manner sends a very negative signal. I’m shocked.”
Kalyalya previously served as deputy governor and spent years at the World Bank. Mvunga is an accountant who has worked for lenders including Standard Chartered Plc and Standard Bank Group Ltd. He doesn’t have the necessary experience in central banking, Simumba said. A call to Mvunga’s mobile phone didn’t connect.
“Christopher Mvunga is not capable of being central bank governor,” Simumba said. “Let’s be very clear about that.”