DON’T TRUST IMF - HAABAZOKA
THE call by the International Monetary Fund (IMF) for governments to subsidise fuel and food prices is a clear indication that they should never be trusted, especially by developing countries like Zambia.
Advising governments to provide such subsidies is a trap for developing countries to continue accumulating dollar-denominated debts which will ensure that governments are enslaved to the IMF, according to the former Economics Association of Zambia (EAZ) president, Dr Lubinda Haabazoka.
The Zambian government recently removed fuel subsidies, a decision which was in fulfilment of demand from the IMF before bailout funds will be released.
Zambia is therefore expected to conclude the IMF deal next month after reaching a staff level agreement on a US$1.4 billion debt bailout package.
However, the IMF Head, Kristalina Georgieva, this week encouraged governments to subsidise the cost of food and energy for the poorest members of society through a targeted manner, preferably by providing subsidies.
Responding to this statement, Dr Haabazoka in an interview said: “Their (IMF) advice can never be trusted because today they will say this and tomorrow they say that. In 2010, they told the MMD government to borrow through Eurobonds and the PF government fulfilled that.
“After four years, they turned back and said you have too much credit, you need to come on an IMF programme. So in whatever they say, there is always a trap so we need to be very careful with such traps.”
He explained that if governments had to subsidise, they would have to borrow and if this happens through issuance of bonds, it meant that it was one of the ways countries such as Zambia would remain under control of the IMF.
“The call by the IMF for governments to subsidise fuel and food prices just shows that they should never be trusted anymore. We all know that the IMF has always been against subsidies and in the case of Zambia, they advised us not to subsidise our electricity prices and today they turn around and say we need to subsidise.