The Bank of Zambia (BoZ) has said it will take a cautious approach to banning the use of the U.S. dollar in local transactions to avoid distortions in the economy. This comes a few days after IMF Resident Representative, Eric Lautier, questioned the effectiveness of the deal saying it might defeat its purpose.

According to Lautier, one week ago, “forced de-dollarization measures are likely to prove in-effective and could even be counterproductive” unless they are coupled with a robust macroeconomic stabilisation strategy and depend on the particular conditions and execution methods of each country.

According to reports, companies have also resisted the planned laws, branding them “punitive” and cautioning that they would potentially accelerate price increases. For example, the Zambia Association of Manufacturers stated that given the state of the economy, the action will not be beneficial.

However, according to the Bank of Zambia (BoZ) Governor, Denny Kalyalya, it is unfortunate that the central bank comes under attack from some sections of society, noting that the bank only wants to enforce existing laws which mandate that the local currency, the Kwacha, is the only legal tender for conducting domestic transactions in Zambia.