Mutati welcomes coming IMF talks
The forthcoming consultation between the International Monetary Fund (IMF) and the Zambian government are a welcome development, former Minister of Finance Felix Mutati has said.
Mr. Mutati told the Daily Nation yesterday that this was a welcome development particularly that consultations are to be held at a time the Zambian economy is facing multiple shocks, including volatility in commodity prices, energy challenges, depreciating exchange rate, debt management, declining portfolio capital flows a rising budget deficit, the effects of Covid-19 and potential vulnerability in the domestic financial market.
He said Zambia’s current economic challenges will necessitate in-depth, on-going consultations with the IMF and that it is critical that the IMF give serious consideration to reinstate its country representative to be based in Lusaka, without much delay.
He said the macroeconomic challenges facing Zambia, called for a stronger than ever before, far much closer interface between the custodians of the monetary policy (Bank of Zambia) and the custodians of the fiscal policy (the Ministry of Finance) in setting the Zambian economy on the recovery path.
The upcoming consultations could also be a key stepping stone to obtain IMF support for Zambia’s economic recovery plans, and set a basis for a roadmap towards an economic recovery programme backed by funding, debt relief, and technical assistance.
He noted that in the current situation, monetary policy could be a macroeconomic management tool of first resort, given that it could be implemented much more flexibly and quicker that the fiscal policy.
He however said monetary policy had to be implemented by effective fiscal policy responses, which typically were a medium to longer term instruments.
“Accordingly, the IMF should seek to take a more positive view in providing technical assistance and draw on its expertise in supporting a framework for improving the interface between fiscal policy and monetary policy institutions, as they work towards addressing Zambian’s macroeconomic challenges , seek to stabilise the economy, and in setting the country on the path of recovery.
“The upcoming consultations could also be a key stepping stone to obtain IMF support for Zambia’s economic recovery plans, and set a basis for a roadmap towards an economic recovery programme backed by funding, debt relief, and technical assistance,” Mr. Mutati said.
He said it was also his expectation that the IMF could render an objective view on Zambia’s economic recovery measures and point out where the country was doing well and areas which the current plans could further be refined to enhance recovery.
He also called for engagement of local stakeholders by Government to ensure an unequivocal input from them.
“It is my expectation that the Zambian authorities could consider taking an approach, as they have commendably done with the national budget process, to engage the private sector and Civil Society Organisations, prior to consultations with IMF.
“This will be important in presenting a united, common front for Zambia to the IMF, for setting our economy on the recovery path and having a platform to build on, post the coming consultations,” he said.