Bank of Zambia cuts reserve ratio by 5% to boost liquidity

The Bank of Zambia (BoZ) has reduced the statutory reserve ratio on Kwacha deposits from 26 percent to 21 percent in a move aimed at injecting more liquidity into the banking sector and supporting increased lending to businesses and households. Speaking at the 98th Agricultural and Commercial Show in Lusaka, BoZ Governor, Denny Kalyalya, said the five percentage point reduction will take effect from August 3, 2026, and formed part of the central bank’s efforts to influence interest rates and improve access to credit. “The statutory reserves for the Kwacha will be reduced by five percentage points, from 26 percent to 21 percent,” Kalyalya said.

He said the statutory reserve ratio for foreign currency deposits would remain unchanged at 36 percent to safeguard external stability and ensure the prudent management of foreign exchange reserves. The reduction means commercial banks will be required to hold less money with the central bank, freeing up additional funds that can be channelled into lending and other productive economic activities. Kalyalya said the decision reflected the central bank’s commitment to increasing liquidity in the financial system while maintaining financial sector stability.

“The decision demonstrates its commitment to balancing the need for increased liquidity with the need to maintain financial sector stability,” he said. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express permission from ZAMBIA MONITOR.