Zambia’s request for emergency coronavirus funding from the International Monetary Fund may be scuppered because of the southern African nation’s growing debt burden.
The Washington-based lender last year cautioned that the nation’s borrowing was on an unsustainable path. And now, even as the fund makes as much as $100 billion available to member countries, the IMF warned it won’t lend money to governments if it’s not sure it will be repaid.
“In cases where the debt is unsustainable, the member must take steps to restore debt sustainability in order to access fund financing,” the IMF said in response to questions about whether Zambia’s borrowing could hinder its access. “This could require the government to strike a balance of fiscal adjustment that protects critical social spending and debt “If a country’s debt is unsustainable, the fund can only lend if it has adequate assurances that the member is on track to restore sustainability,” the IMF said. “If such steps involve a debt restructuring operation, we take into account its prospects for success in restoring sustainability.”
Relations between the government and the IMF have been strained in the past, with the lender yet to replace its resident representative after Zambia asked the last one to leave the country nearly two years ago.