German Ambassador Bernd Finke has been asked by media houses to comment on the decision of the Government of Zambia, as announced by Minister of Finance Alexander B. Chikwanda in Parliament on 13 February, to seek an aid program with the International Monetary Fund/IMF. Here are Ambassador Finke’s preliminary remarks:
I have taken note of Finance Minister Chikwanda’s announcement before Parliament that the Zambian Government would seek an IMF support program.
Going to the IMF is never an easy decision. Therefore we can assume that the Zambian Government has engaged in a thorough and unvarnished stock-taking exercise about the current economic and financial situation of the country and has come to the conclusion that an IMF support program is the best option to tackle the current crisis and to secure Zambia’s financial solvency and liquidity.
this assumption is correct, I would say that it is prudent to seek IMF assistance rather sooner than later. Better to address the current challenges immediately, however painful that might be, than to further delay crisis management and reforms.
We need to bear in mind that an IMF support program is not a free gift. IMF aid packages are usually closely linked and dependent on governments’ readiness to accept austerity measures and initiate overdue economic and financial reform programs. If the Zambian Government is committed to such measures this would be good news as well.
No doubt, there are major external factors which have triggered and aggravated the current economic and financial crisis, among them the unpredictable fall of copper prices or the bad rainfall patterns, which heavily contributed to the energy crisis. But there are also – as the President and Ministers have repeatedly acknowledged – domestic policies and sectors which are in need of urgent reforms.
If an IMF program contributes to accelerate economic policy reforms, strengthens good financial governance, leads to the overdue diversification of the economy, and harvests Zambia’s great potential for economic growth and employment, then the Government’s decision to go for an IMF support program should give rise for optimism – for the Zambian people and for Zambia’s long term Cooperating Partners and friends, like Germany.”