IMF NOT HERE TO BAILOUT ZAMBIA-MUTATI

By SIMON MUNTEMBA GOVERNMENT says the International Monetary Fund (IMF) was not there to bailout Zambia.

Finance Minister Felix Mutati told Parliament yesterday in a Ministerial Statement that the engagement with IMF was aimed at leveraging international support for attaining Government’s key objectives of restoring fiscal fitness, debt sustainability, addressing external sector vulnerabilities, job creation, sustained inclusive growth and development.

In March this year, Cabinet approved that Government should engage the IMF on a possible programme, under the Extended Credit Facility. The engagement was on the basis of the Economic Stabilization and Growth Programme.

“This engagement does not mean that the IMF is here to bailout Zambia. We have as a nation defined the Economic Stabilization and Growth Programme that is required to move the economy forward. IMF is being engaged to provide Balance of Payments (BoP) support as well as to provide an independent policy assessment,” Mr Mutati said.

Mr Mutati said significant progress has so far been made in undertaking policy and structural reforms under the ESGP, which the IMF has also acknowledged and commended Government. These reforms are in such areas as agriculture, energy and financial management.

He disclosed that the major outstanding issues under discussions with the IMF were the need to take measures to slow down the pace of debt accumulation and return Zambia’s debt risk from high risk of debt distress to low risk and scaling up fiscal consolidation measures, particularly expenditure restraint.

Mr Mutati added that both these aspects were part of our key reform measures adding that they were clearly outlined in the Economic Stabilisation and Growth Strategy.

The Minister stated that what the IMF had asked was to have those measures accelerated.

“Cabinet on November 6, 2017 discussed these issues and gave a clear policy directive. These include developing a new financing profile that will ensure reduction in debt distress from high to moderate over the medium-term, and ensure that the debt remains sustainable thereafter; and re-prioritising projects by concentrating on ongoing before embarking on new ones,” he said

He added that re-scoping projects to be implemented in stages to ensure fiscal sustainability. An example is the implementation of the Lusaka – Ndola dual carriage way in stages as announced in the budget; and hasten the implementation of revenue mobilisation measures such as automation, appointment of tax agents, and establishment of single windows at border posts, land titling and tolling were some of the clear clear policy directive discussed.

Mr Mutati further disclosed that Cabinet resolved for Suspension of new non-concessional borrowing, no commercial contracts that require debt financing should be signed without Treasury Authority; and that the Tender and legal approvals should not be given where funds were not available.

The Zambia’s Chief Accountant said the task of Zambia was to ensure that the country borrowed within its capacity to pay and to refocus expenditures while enhancing domestic resource mobilisation.

Of critical importance, he said, is to focus on completing ongoing projects before embarking on new ones adding that with those measures, Government has continued to engage the IMF.

The Minister also pointed out that as part of the engagement, Government recently had a visit by the Director of the African Department, the New Mission Chief and the Executive Director in charge of Zambia.

He said during the visit, the mission met President Edgar Lungu and his Vice President Inonge Wina.

Mr Mutati said as a member of the IMF, Zambia must utilize a key mandate of the IMF of providing Balance of Payments Support to members experiencing balance of payments problems as has been the case for Zambia since 2015.

“And in addition to the provision of Balance of Payments Support, the IMF is also a catalyst to access budget support and other flows from multilateral and bilateral cooperating partners. Furthermore, having a programme will enhance flows from private sector investors and reduce negative sentiments on the investment climate in the country. This is because many investors mainly rely on the IMF for the assessment of the country’s investment climate,” he said.