Economic Stability at Risk Over Foreign Reserves Use

Hikaumba warns that drawing down reserves could weaken the kwacha, raise inflation, and undermine Zambia’s long-term economic resilience

By Francis Maingaila ♥️ 

Lusaka, Zambia24 --- (29-06-2026) — Movement for Democratic Change (MDC) Vice President Leonard Hikaumba has cautioned that proposals to use Zambia’s international foreign exchange reserves to ease the cost of living could put the country’s economic stability at risk.

Hikaumba was responding to recent remarks attributed to presidential candidate BrianMundubile, who has suggested that government consider utilising foreign reserves as a short-term response to rising living costs.

Hikaumba said foreign reserves are a critical safeguard for the economy, supporting the importation of essential goods such as fuel, medicines, fertilizer, and industrial inputs.

He warned that drawing down the reserves could weaken the kwacha, triggering currency depreciation and increasing the cost of imported goods, which could worsen inflationary pressures.

Hikaumba further argued that reduced reserve levels could damage Zambia’s creditworthiness, making it more difficult and expensive for the country to access international financing.

“A depletion of foreign reserves would expose the economy to avoidable shocks and weaken confidence in the financial system,” he said.

He added that such a move could also limit the country’s ability to respond to external economic shocks and increase dependence on external lenders under stricter borrowing conditions.

Hikaumba urged authorities to focus on long-term economic solutions such as productivity growth, industrialisation, and fiscal discipline, rather than short-term measures that could undermine macroeconomic stability.

Foreign exchange reserves, typically held by central banks in major foreign currencies, are used to stabilise national currencies and support international trade payments.