The World Bank has opposed Zambia's central bank's decision to get a loan facility from the International Monetary Fund (IMF) aimed at replenishing the country's reserves, describing the move as unsustainable, The Post reported on Monday.

World Bank manager for Zambia Kapil Kapoor said the Bank of Zambia's (BoZ) proposal to get a loan of about US$200 million from the IMF to replenish the country's foreign reserves will be costly for the country and a serious threat to foreign exchange reserves.

Kapil cited Russia, which had in the last six months spent over US$250 billion with very little success to keep healthy the value of its local currency, the ruble since the collapse in international prices of oil in the country's chief export earner, The Post said.

Kapoor, who said the central bank's intervention in the foreign exchange market to protect volatility of the local currency reduced the country's import cover, said central banks were financiers to the government and that most monetary decisions they made depended on the political pressure as well as influence from other interest groups of society, according to The Post.

He, however, said it was normal and constituted economic sense for the country to borrow money from the IMF to prop up the reserve levels to enable the country get back to three months of import cover target which he said was normally the desired target.

BoZ Governor Caleb Fundanga recently said the country's balance of payments position had deteriorated quite significantly and that the new funding of US$200 million would be used to increase foreign currency reserves and would be concluded by May this year, The Post said.

(Xinhua News Agency March 25, 2009)