IMF won’t give Zambia loan due to careless borrowing

IMF won’t give Zambia loan due to careless borrowing

We halted Zambia’s IMF Program after PF regime borrowed $1.2billion for a road

The International Monetary Fund says it halted the process to lend Zambia money after the PF regime careless borrowed $1.2 billion to construct a road from Lusaka to Ndola.

Most right thinking Zambians condemned the PF regime and correctly noted that the regime inflated the cost of constructing a carriageway from Lusaka to Ndola by more than 70 per cent. But it has now been confirmed that the IMF reacted by suspending the process of lending money to Zambia.

IMF spokesperson Gerry Rice confirmed in Washington yesterday that the Zambian program has been halted.

See below the full statement posted on the IMF website:

Transcript of IMF Press Briefing
November 30, 2017

MR. RICE: Well, good morning, everyone, and welcome to this press briefing on behalf of the International Monetary Fund. I’m Gerry Rice of the Communication Department. And as usual, this morning the embargo for this briefing will be 10:30 a.m., and that’s Washington time. I will make a few announcements and turn to questions in the room. And I can see that we’re already quite busy online as well.

So let me begin with some of the scheduling announcements. The Managing Director, Christine Lagarde, will travel to Africa from December 10 until December 19. Madame Lagarde will visit Benin, Ethiopia, and Djibouti, where she will meet with the authorities, private sector, labor groups, civil society, and so on. In both Benin and Ethiopia, she will hold a press conference and deliver keynote speeches, which we will get to you in good time as usual.

Okay, thank you very much, and let me turn to any questions in the room.

Questioner: Hi. I was wondering if you could update us on the *IMF’s assessment of the situation in Zimbabwe following the change of regime there* ?Last week the mission chief had said that the situation was very difficult and, you know, that there were a lot of steps that would take for it to get back to normal. Has there been any contact with the new government there? Any discussion about sort of getting external financing going again?

MR. RICE: Thank you. So let me give you a sense of where we are on Zimbabwe. As you mentioned, our mission chief, Gene Leon, had communicated quite extensively several days ago, but let me try and summarize a bit where we stand. So of course, Zimbabwe faces severe economic challenges on a number of fronts. So restoring growth will require concerted efforts to tackle the fiscal deficit, to complement that with structural reforms, and so on.

What I can say in terms of the IMF and your question, we stand ready to support the authorities in their efforts to design policies that can indeed restore stability and growth. And moreover, in addition to a strong and coherent reform program, we see a concerted international effort will be required to revive and reintegrate the Zimbabwean economy. And I think, as our mission chief had said, an IMF financial arrangement, for example, would only be possible after progress in resolving Zimbabwe’s arrears to other international financial institutions and other creditors.

In terms of next steps and engagement, we will have a regular staff visit in early December. So that’s going to be in the very near future, in the coming days. And that mission will update our assessment of Zimbabwe’s fiscal position,d foreign exchange developments, and inquire about the new administration’s economic plans. As you know, the new president is putting in place his cabinet and, as I said, we stand ready to work closely, and that staff visit should help us to make progress in that direction.

There’s one other question on *Zambia and the status of the IMF relation with Zambia* So let me take that.

Where we are on Zambia is that discussions on a new arrangement were put on hold in August of this year after the authorities unveiled large borrowing plans that we believe threatened that sustainability. So during the Annual Meetings and during a follow-up set of meetings actually led by our Africa Department Director Abebe Selassie, who made a recent visit to Zambia, the authorities expressed their will for a speedy re-engagement with the Fund. Where we stand is that while progress has been made on several elements of a prospective program, the discussions will need to progress and provide greater clarity, including on fiscal policy commitments and credible borrowing plans consistent with debt sustainability.

So we’re just essentially waiting for further data and details on the government’s external borrowing plans, and then we would field a staff visit to update the macro framework and discuss the way forward.

 

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