The International Monetary Fund says Zambia is currently not ready for any programme to help restore the battered economy owing to the government’s indiscipline with expenditure.
IMF deputy director for the African department David Owen yesterday concluded his two-day consultative meetings with top government officials and key stakeholders in the country as part of the ongoing engagement between Zambia and the Fund.
The sources said Owen, during his meeting with civil society, was concerned that the Zambian economy had continued to weaken and any remedial measures to be agreed between the government and the IMF could not hold at the moment owing to the lack of credibility of Zambia’s Treasury as the country had consistently overspent with no respect for the budgeting process.
“He [Owen] it very clear that the IMF was willing to help to restore the economy which currently is off-track but that any programme should be done only when the government is ready to swallow the bitter pill or bite the bullet, but that is not the case at the moment,” according to sources. “Mr Owen said the biggest challenge Zambia is facing at the moment is the level of fiscal indiscipline and credibility of the level of expenditure management. So yes, he said the country was constrained in its revenues but the government equally is not willing to apply any fiscal restraint.”
The sources said during the consultation process, Owen agreed that any package to help restore the economy could only be put in place after the general elections.
“He said that inevitably, whether the new government will be ushered in after August 11 polls, there will be need for more credible economic management team than what is obtaining at the moment looking at the way the macroeconomic fundamentals have worsened,” said the sources.
IMF country representative to Zambia Tobias Rasmussen confirmed Owen’s visit but did not divulge the details.
“He is meeting with a number of senior government officials as well as representatives from the private sector and civil society, but no meeting is scheduled with President Lungu,” said Rasmussen. “Mr Owen is coming alone and his visit is not directly related to that of the larger team that was here in November, but is part of the ongoing IMF engagement with the Zambian authorities.”
Last November, the IMF suggested a programme with a US$1 billion interest-free loan for Zambia that was aimed at getting the country out of its current economic problems, but with conditions, such as the realignment of expenditure on ongoing road infrastructure, reducing fuel subsidies and discontinuation of unplanned expenditures.
But President Lungu rejected the proposal based on the fact that the suggested measures were likely to work against his reelection this year.
And in an internal memorandum dated November 30, Tsidi Tsikata, who headed the IMF mission to Zambia late last year, told the Fund that President Lungu had told them that he was considering calling for an early election to get politics out of the way as he addresses the country’s economic situation.
According to Tsikata, President Lungu expressed interest in an IMF programme but could not agree to it immediately for fear that the opposition would politicise the initiative.
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