The International Monetary Fund says Zambia’s proposals are poorly designed and can end up causing more damage. The IMF has maintained that Zambia’s debt is unsustainable
IMF TRANSCRIPT ON ON ZAMBIA 21 MAY 2020
Lots and lots of questions about Zambia. Matt Hills, of Bloomberg, who is in Maputo — hi, Matt. Matthew Lee, our friend in New York, Laura Gardner Cuesta, again, questions as follows: broadly, on Zambia’s — the state of the status of discussions with the IMF, Zambia’s debt, how can it be made sustainable? Matt Hill, of Bloomberg, asking about, again, Zambia’s debt, as unsustainable, how can we deal with that? Matthew Lee, status of the talks, the sustainability of Zambia’s debt, is it likely to receive IMF help? Can you confirm? Zambia’s Finance Minister says it has applied to the IMF for an RCF, or rapid credit facility. So, oh, and by — Eric Martin, of Bloomberg, too. Lots of questions on Zambia today. Let me try and get to those.
Yes, I can confirm the Zambian authorities have requested emergency assistance from its international partners, including the Fund. This comes in addition to an earlier request from Zambia for fund support for their economic reform program, more broadly. Any IMF financial support, including emergency financing, is contingent on steps to restore debt sustainability. So, I’m coming to answer the questions. As indicated in last year’s Article IV consultation with Zambia, and as published in the report, there, for you to look at, Zambia’s public debt is on an unsustainable path, under current policies, as the Minister said in February, and we note the government’s commitment to restore debt sustainability through fiscal policy adjustment and debt management. So, that’s where it stands.
Let me also say this to try and help and explain the context. It’s the Fund’s role to help countries address their medium-term viability, economic viability, and we are always and everywhere prepared to perform this role. That’s what we do. Our rules are there to help us keep a laser-like focus on designing programs that will work to help the country escape its problems, and they reflect decades of experience, really, of what works and what does not. So, I say that because particular care must be taken in unsustainable debt situations. Why? Because a poorly designed program can make matters worse for a country and its citizens. So, it’s important to get that right, and with strong commitments and actions, by a country and its creditors, a way forward can be found, which we can support, and, again, we always try to make that happen as soon as possible. You know, I won’t speak for other international institutions, but I know they are as dedicated as we are to resolving problems, and, again, more recently, in the case of Zambia, the authorities have expressed their intention to restructure Zambia’s debt, and, in this context, to hire debt advisors.
So, the bottom line is, on all of that, is we continue to have active discussions with the Zambian authorities on their economic response to the pandemic, as well as their medium-term macroeconomic objectives and policies. I did go into a little bit of detail on Zambia. There were lots of questions on Zambia, and that’s why I did that.
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