The International Monetary Fund has urged Zambia to cut spending as a way of reducing the mounting debt.
Zambia has been pursuing a US$1.3 billion financial bail out from the IMF for over three years.
But at the end of its latest staff visit to Zambia, the IMF just stressed the need for a large, front-loaded and sustained fiscal adjustment that would help set debt on a downward path and reduce domestic arrears.
In a statement, the IMF says Zambia’s spending commitments should also be prioritized in order to meet key development priorities including supporting vulnerable populations.
The staff team was led by Dhaneshwar Ghura and were in Lusaka from November 13–19, 2019 to discuss recent economic developments and the economic outlook for 2020 and the medium term.
At the conclusion of the visit, Mr. Ghura said,” Macroeconomic outcomes have weakened as a difficult fiscal position combined with a severe drought have resulted in projected growth slowing to below 2 percent and an increased risk of food insecurity.
“Discussions covered both near and medium-term policy options to address these challenges, including the main elements of the draft 2020 budget being currently debated in Parliament.”
“The IMF staff met with President Lungu, Minister of Finance Bwalya Ng’andu, Bank of Zambia Governor Denny Kalyalya, other senior government and Bank of Zambia officials; and representatives of the private sector, civil society organizations, and Zambia’s development partners.
“The staff wishes to express its gratitude to the Zambian authorities and the various stakeholders for the constructive spirit in which all discussions were held.”