No bailout package for Zambia yet – IMF

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President Lungu

President Lungu

President Edgar Lungu held meeting with An International Monetary Fund (IMF) team led by Tsidi Tsikata who is division chief African department in Washingston and Mr Tobis Nybo Rasmussen IMF Resident Representative in Lusaka at State house.

The International Monetary Fund has revealed that it has not yet entered into any financial bailout package with the Zambian government.

And the IMF has projected that payment arrears to suppliers and contractors will increase from about K10 billion at end-2015 to about K20 billion at the end of 2016.

Briefing the media at the end of the IMF Staff Mission visit to Zambia, team leader Tsidi Tsikata said the IMF and the Zambia government have not yet agreed an aid package due to dwindling economy performance.

Mr Tsikata said it would have been premature to engage in an economic bailout package for now as the two weeks the IMF team has been in Zambia was spent on negotiations with Government and other stakeholders.

He emphasised that the Zambian economy is currently under stress because of internal and external factors.

Mr Tsikata revealed that the IMF team will be returning in early 2017 for normal consultations and to discuss possible IMF programme.

He also said that the IMF supports the removal of fuel subsidies and the planned removal of electricity subsidies.

“The Zambian economy continues to be under stress from the impact of external and domestic shocks and an unbalanced policy mix. The pace of economic activity remains sluggish in 2016, with growth projected at 3percent due to continued electricity shortages, low exports and subdued private sector consumption and investment,” Mr Tsikata said.

“Public finances are severely strained. Fiscal performance through the first three quarters of 2016 was characterized by shortfalls in revenue and substantial spending overruns on fuel and electricity subsidies.”

He added, “The government has also been accumulating payment arrears to suppliers and contractors. The stock of arrears is projected to increase from about ZMW10 billion (5 percent of GDP) at end-2015 to about ZMW 20 billion (9 percent of GDP) at the end of 2016. On a cash basis, the fiscal deficit for the whole year is projected to reach 5 percent of GDP, and the deficit on a commitment basis (i.e., taking into account the net accumulation of arrears during the year) at about 10 percent of GDP. To date, the cash deficit has been largely financed with domestic borrowing, mainly from the Bank of Zambia.”

“Monetary policy has continued to carry the burden of policy adjustments. A tightening of monetary policy helped stabilize the exchange rate and put inflation on a downward trajectory. However, the ensuing tight liquidity conditions together with the slowdown in International Monetary Fund Washington, D.C. 20431 USA growth and the accumulation of government payments arrears have put the private sector and the banking system under stress and led to an increase in non-performing loans.”

“Zambia’s current economic challenges can be overcome with resolute policy action such as the recent adjustment of fuel prices to cost-reflective levels and the announced intention to reduce electricity subsidies. These measures, if coupled with structural reforms to reduce inefficiencies and increase capacity utilization in the energy sector, would go a long way toward increasing Zambia’s potential growth.”

Mr Tsikata said the mission welcomes the authorities’ plan to scale up social cash transfers and protect social spending, including on health and education, to mitigate the potential impact on the poor.

“The mission welcomes the authorities’ decision to undertake a broad-based consultative process to ensure support within the government and across national stakeholders for their policies and reforms that could be implemented under an IMF arrangement. At the authorities’ request, the mission will return to Zambia in early 2017 to conduct Article IV consultation and program discussions.”

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8 Responses to No bailout package for Zambia yet – IMF

  1. In a way, this is blessing in disguise. Imagine if IMF had given money to Zambia all the cash would be looted out by the Government officials through dubious projects like road rehabilitation and construction and then the PF would be boasting of performing when the country is deep in Kaloba. This is why we say Zambia is a failed state. What the Zambian citizenry should be asking Government is to provide an audited account as to how the Euro Bonds were used before any borrowing. The PF has no capacity to invest any borrowed money wisely.

    Choongo Mulenga
    November 2, 2016 at 7:33 am
    Reply

    • What is the cost of hosting IMF officials several times a year? They were here in April & October 2016 & now they are expected back early 2017.

      Who is paying for their travels and stay(per Diem) in Zambia other than the cost eventually being embedded in the anticipated recovery package?

      By the time the anticipated recovery package is released to Zambia Half of it would have been spent in embedded/hidden in travels and stay(per Diem) costs?

      There is no honor in borrowing just like there is none in begging!

      A country where every citizen/pensioner thinks only in investing in Sido shops(selling groceries), Minibus/taxi & Real Estate without plan of how to create employment for their targeted clients/customers is country in total mess! How do you expect people to buy your groceries, ride your car & rent your House when they are jobless? Every home has a taxi & a shop then who is buying from who? People in formal employment engage in selling cabbages, tomatoes, secondhand clothes, used cars etc then how would the unemployed survive? In a normal society most formally employed citizens must be contented with their jobs/earnings so as to assist the unemployed by buying from them. They should have time to go on holidays unlike 08:00-17:00 office work, after 17:00 taxi pirating or selling tomatoes. You killing those that do never expect a monthly pay.

      Another indicator of how rubbish Zambian economy is, it is the frequencies at which real estates & tenancies are changing hands. You own a house today & in three years that house has passed through 4 owners. That’s alarming!

      Neutral
      November 2, 2016 at 8:49 am
      Reply

  2. Donuna Reverse

    mess
    November 2, 2016 at 8:09 am
    Reply

  3. In the nutshell, the IMF is telling the PF government to clean-up it’s house first before the Fund commits it’s money again in Zambia. By cleaning it’s house, I mean, the Fund is telling the PF government to observe good governance, fight corruption, which President Lungu himself has acknowledged through his recent statements, observation of media freedom and a host of other shortfalls. This is DIPLOMACY at its best. Should the PF Government fail to adhere to the above mentioned concerns, forget even the 2017 promise. Back home, we shall begin to see reconciliatory approach by PF to the opposition UPND, we shall see more concerted efforts to fight corruption and probably more efforts will be made to address the recent Auditor- General’s Report. Watch the space. Bana tukwati Ku makutu.

    Sinono
    November 2, 2016 at 8:16 am
    Reply

  4. IMF cannot give money to zambia because of the bad human rights under LUNGU.This ILLEGAL PRESIDENT Called LUNGU must now face it.

    phote
    November 2, 2016 at 9:43 am
    Reply

  5. This is a wake up call to the Zambian government to minimize borrowing & make sure spend borrowed money WISELY.

    I mean carry out meaningful projects(ESPECIALLY AGRICULTURAL) that bring back profit within the shortest possible time to help government pay back it’s DEBTS in time.

    jomunsa
    November 3, 2016 at 2:02 am
    Reply

  6. The reason why we voted PF out is because we saw that they cannot handle this free fall economy, but due to they stubbornness they engaged M7 to help steal the election results. They think IMF can be manipulated like they deed with the Cockroach courts. So no more kick backs for shit for Zambia and Hyena kudo kwa Mafi

    kabiki Foloko
    November 3, 2016 at 11:07 am
    Reply

  7. Free advise, Let Pf use P.Isaacs print Loan application forms from Dubai,ask M7 send Chvula hack IMF IT data and let the cockroach courts refuse rule in favour of IMF.The free funds will becoming to pay musicians and some crooked pastors and allow chiefs lodge in the hotels and lodges for another four weeks like they did during election and some time prior to elections

    kabiki Foloko
    November 3, 2016 at 11:30 am
    Reply

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