LUSAKA – The Bank of Zambia (BoZ) has reduced the statutory reserve ratio on Kwacha deposits from 26 percent to 21 percent, a move aimed at improving liquidity in the banking sector and increasing access to financing for businesses and households.
The adjustment, announced by Bank of Zambia Governor Dr. Denny Kalyalya, takes effect on Monday, August 3, 2026.
Dr. Kalyalya said the reduction will allow commercial banks to retain a larger portion of their Kwacha deposits instead of holding them as reserves with the central bank, thereby increasing their capacity to lend to productive sectors of the economy.
He said the revised reserve ratio applies to Kwacha deposits, including Government and Vostro deposits, while the reserve requirement for foreign currency deposits remains unchanged at 26 percent.
The Governor explained that the decision was made under Section 47 of the Bank of Zambia Act, 2022, which empowers the central bank to determine statutory reserve requirements as part of its monetary policy framework.
Dr. Kalyalya said the measure is expected to strengthen financial intermediation by giving commercial banks greater flexibility in liquidity management and encouraging increased lending to sectors such as agriculture, manufacturing, and small and medium-sized enterprises (SMEs).
He also announced that commercial banks will now be required to comply with statutory reserve requirements on a weekly basis instead of daily, a change intended to improve liquidity management while maintaining compliance.
Dr. Kalyalya, however, said the central bank will continue monitoring the impact of the policy adjustment to ensure that increased liquidity supports economic growth without undermining price stability.
The decision comes as businesses continue to call for improved access to affordable credit to stimulate investment, production and economic expansion.
Source:
Bank of Zambia/ Ask Muvi TV