International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn said today that Zambia risked incurring huge loans if the country continues borrowing from other countries.
Speaking at State House today during a meeting with President Rupiah Banda, Mr. Strauss-Kahn advised government to get loans that the country would be able to pay back to avoid huge debt burden.
Speaking at the same function , President Banda hailed the International Monetary Fund (IMF) for undertaking ambitious reforms aimed at enhancing the governance of IMF and economic well being of member
President Banda said the reforms, aimed at making the fund’s financial support more flexible and better tailored to the diverse needs of low income countries, were particularly important for countries like Zambia.
Mr. Banda said he was aware that Zambia has benefited from the reforms with resources amounting to US$260 million in 2009 and this year under the extended credit facility.
The president said the IMF and Zambia share a common goal of reducing poverty through macro-economic stability adding that government would continue working closely with the Fund.
Mr. Banda said his government looked forward to continued collaboration so that more progress could be made for the benefit of the Zambian people.
The president said he acknowledged the role IMF played in reducing the country’s debt burden through the highly indebted poor countries initiative (HIPC).
He said although the debt burden had been reduced and a lot achieved in terms of freeing resources for economic development, there were still a lot of challenges in terms of economic development and poverty reduction.
Among the challenges the country was facing were lack of sufficient infrastructure especially in the road, railways and energy sectors.
Mr. Banda said before the reduction of the debt under HIPC, the country was able to access funding under the international development Association (IDA).
“Now that we have achieved debt sustainability, our access to IDA funding had diminished despite our huge developmental needs. This has limited the extent to which we can implement development projects,” President Banda said.
The president said however that his government remained committed to addressing the problem of infrastructure and improving the business environment despite the financial limitations. He said the country looked for China for support because it needed financing at concessionary rates to build the necessary infrastructure.
Mr. Banda said he was delighted that IMF chief decided to include Zambia among the countries he was visiting because it has consolidated the relationship Zambia has with IMF