SPEND WITHIN BUDGET, STATE WARNED
By BUUMBA CHIMBULU GOVERNMENT must spend within the budget as not doing so may cause the International Monetary Fund (IMF) to lose confidence and not assist Zambia with the economic bailout. warns the Zambia Institute and Policy Analysis (ZIPAR).
ZIPAR also says the weakening of the Kwacha would result in expensive imports.
ZIPAR research fellow, Caesar Cheelo, observed that negotiations between Government and the IMF for an economic bailout had been tough which called for prudent use of resources to convince the fund assist the programme.
“There has been a challenge in Zambia in that fiscal discipline has been difficult to achieve in that people who would have been there to help you such as the IMF start to lose confidence. They start to think you are spending a little bit recklessly because you are spending on things which were not planned in the budget,
“So as these new debts start to appear on your books, the IMF starts to ask wait a minute, where did this money you are spending come from and if you cannot explain yourself then they hold back their money,” he said.
Mr. Cheelo warned that until Government fixed its expenditure to the level that the IMF was comfortable, the fund would continue with the negotiations.
“I think there is some level of limited information regarding what is going to happen with the IMF. I think the negotiation has been tough, you just need to read between the lines to see that it has been tough,
“After the spring meetings (World Bank and IMF) of April 2017, the minister (Felix Mutati) assured the nation that in August when the IMF board sits, they will make a decision, meaning that between April and August, Government was supposed to submit a formal request for the IMF support.
Meanwhile, Mr Cheelo said the increased appetite for the dollar had increased leading to the Kwacha to lose.
Mr. Cheelo explained that this development meant that it become a little more expensive to import.
Finance Minister Felix Mutati (l)