The breakdown in talks between the Zambian government and IMF

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Chibamba Kanyama
Chibamba Kanyama

By Chibamba Kanyama

I have received many enquiries from colleagues about what I make of the ‘breakdown’ in talks between the Government and the International Monetary Fund. My views are as follows:

1. Both parties, the Zambian Government and the IMF want the Program. On the part of the IMF, lending for balance of payments support is one of its three co-mandates. When Zambia requested for a program this year, the IMF expectedly went into motion, preparing ground for lending to one of its member states; in part to support economic stability and second, to contain spill-over effects. As things stand, Zambia is at high risk of debt distress and all efforts must be made to bring the risks down, moderate as the target. IMF responds professionally and aggressively to requests for lending for a three-year package that attracts the barest of interest rates (presumed to be below 1 percent).

On the part of Government, the economic fundamentals have been very weak since 2015 and if not fully arrested, the country can slide back to what we just experienced despite a rebound in copper prices, an end to power outages (certainly at huge cost) and an end to election-induced spending. Both the Minister of Finance Felix Mutati and Bank of Zambia Governor Denny Kalyalya are aware of the potential risks and the best response is to build economic buffers the IMF route. Creditors to Zambia, particularly sovereign bondholders, are fully aware of this risk and that is the reason the ongoing talks are international news. Any indication of breakdown in talks has an immediate impact on the exchange rate. Just recently, the government securities were undersubscribed hence (in part) the scarcity in dollar supply.

2. The real problem leading to what we may term ‘breakdown in talks’ is Zambia’s true debt position. IMF has in the past three years (learning from Mozambique and, in part Greece) placed substantial weight on Debt Sustainability Assessment (known as DSA). I have privately shared with government officials in the past one year to take time to understand how the IMF operates because any mishap in negotiations will trigger reputational problems. IMF is a ‘data’ organisation. You can lobby, talk and persuade it on a position using qualitative information. They will just look at you. Dealing with IMF requires authentic quantitative information. It appears the data government has provided the IMF is not speaking to the data IMF has about Zambia’s debt profile. IMF wants government to come clean on this issue.

Let me use an analogy to drive the point home (this analogy is grossly misstated but helpful for purposes of this communication): You are planning to marry a king’s daughter, all is going well in terms of wedding preparations except for the setting of the date for exchanging rings and vows. Suddenly, information emerges that the ‘groom’ is seeing someone else, who is already pregnant. The king’s daughter will not call off the wedding but may ask you to come clean before you proceed with the marriage! Were there loans contracted in 2017 while program negotiations were in place? This appears to be the case.

3. Way forward: Government has done a lot so far to ensure the program succeeds. The level of commitment on the part of the Minister of Finance and his team cannot be under- estimated. Sufficient ground has been made for an IMF program such as subsidy reforms and many more reforms associated with debt contraction underway. President Edgar Lungu has personally made announcements in support of an IMF program, an assurance that sits well with IMF. However, a few things ought to be done:

a. Dedicate a fully commitment team of technocrats to skim through the mountains of data and provide that which sits well with IMF expectations. Having chatted with the IMF Zambia team on several occasions over lunch when I served at the Fund, I would urge Mr. Mutati to rehire the former permanent secretary Felix Nkulukusa to support the current Permanent Secretary Mukuli Chikuba. Nkulukusa is highly respected in the IMF ranks and can fully support the Zambian team as a consultant for speedy and authentic execution of the project. The duo, plus other negotiation team members, cannot fail to deliver.

b. There must be a definite buy-in by the Cabinet. I have raised concerns before that Cabinet does not appear to be in full agreement on an IMF program and that’s why it seems, in the eyes of the investors, the program is pushed by only two people, Mutati and Kalyalya.

c. Communication around the programme should be in simple clear language for all stakeholders. However, given the presumed stalemate, I propose the IMF engagement be withdrawn from the public eye. It is either you disclose the whole truth or you say nothing at all. The latter is the best option as things stand.

d. Let us not give up. The IMF program is good for Zambia. There are no more conditionalities to come following what Government has already done. The benefits will be fiscal discipline, beefing up of reserves, unlocking of budget support from concessional lenders and the closing of the Chapter so that energies of technocrats are redirected elsewhere.

 

Chibamba Kanyama recently served as Front Office Communications Advisor at the International Monetary Fund in Washington DC and currently serves as Managing Consultant for Bridges Limited, specialising in Leadership and Management Training.

83 COMMENTS

  1. THIs is a lot of drivel.

    All talk no action.

    Who is this man anyway ?

    Can he lace my laces of my shoes ?

    Sick and tired of theorists

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    • Salad dressing gibberish.

      Here is the cut throat version of reality:

      Government under Jonathan has borrowed too much money and most of it has vanished, stolen. Government is corrupt, and have no clue on how to run the country. They are thieves. Period. They do not care about poor people.

      Now, was that hard to say?

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    • Chibamba Kanyama , a good friend of mine, looks Presidential. Maybe it’s high time Zambia had a economist for a President. In fact Zambia should do away with the current crop of politicians who do not know whether they are going or coming and replace them with a majority of learned fellas who know what running the modern world entails. To be fail what issue can Lusambo (and all other Kabova’s) critically analyse, as I understand it a former money from Katondo Street. Zambia and Zambians deserve better!

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    • They lied to IMF that the external debt was $2.3 Billion when it was actually $23 Billion

      STYOPET PF00Ls.

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    • This man is former director zb,Znbc director general, and former IMF advisor he is an economist. Very qualified to talk about this and the unfortunate truth is Zambia has to follow that path. There is no money in the economy now and this program doesn’t just bring that but also fiscal discipline

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    • Zambia has a stealing govt. that’s why they employ uneducated, unqualified cadres they can blame whenever there’s stealing. Mutati And Kalyalya won’t be able to clean this mess without ECL. Unfortunately, ECL is the chief thief.

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    • 1. you have a financially indisciplined president who spends more time in mid-air in an aeroplane than in office and u expect IMF to bail u out
      2. you buy 42 second hand WHEEL-BURROWS (fire-fighters) for $42m and u expect IMF to bail u out
      3. you have a bloated civil service which is employing only PF Cadres & youths from Northern & Eastern and u expect IMF to bail u out
      4. You have an irresponsible central bank (BoZ) that refuses to print money thus creating a cash squeeze & killing the economy and u expect IMF to bail u out

      Guys, lets be serious.

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    • Why did you wake if you have nothing meaningful to share with humanity…some of you nincompoops should just hibernate as long as possible…

      There is an important WORD for you today….its REASON…..not in the minimal sense of motive or intention….no..but in the sense of THINK….

      You little spongebob girl

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    • He is actually a very clever man who has worked at the IMF and makes very good points. Unlike you who claims to be a Doctor with nothing to show for it

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  2. THIs is a lot of drivel.

    All talk no action.

    Who is this man anyway ?

    Can he lace my laces of my shoes ?

    Sick and tired of theorists

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    • Mushota you speak, to use you favorite word, a lotta drivel. You hardly understood what Chibamba Kanyama is saying. A holder of CIMA and MBA that you claim, I would expect much more from you on this subject. The business world is moving towards use of data to do business, plan or make projections. Individual businesses, Supermarkets and Multi Nationals etc use what is called Data analytics to make key decisions at Management level. IMF, World Bank and all other international banks used data to make decisions on where they will do business. They use data to profile the regions in order to secure their investment. They will also examine the political situation and other factors but the data you give them has a lot of hidden information. This is not just a theory love!! Shut up.

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  3. THIs is a lot of drivel.

    All talk no action.

    Who is this man anyway ?

    Can he lace my laces of my shoes ?

    Sick and tired of theorists

    People want to listen to President Lungu.

    This is getting on my nerves.

    I have a PhD
    Thanks

    BB2014,2016

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    • I would expect you to cease this opportunity to add comments worthy of a PhD, CIMA, MBA etc. on a topic like this but where is the lot of drivel coming from? You know who.

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    • Analyzer, please leave CIMA out of this…no one with CIMA show off their ignorance in the manner Mushota does…maybe she is just one of these street urchins leaving off stolen resources from our govt….more over we know how cheap PHDs and Masters have been made now…women use their bottom power to be conferred…but not CIMA baba

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    • It is no longer debatable that the PF has failed to perform. Much as we can not use the CONSTANTINO CHIWENGA way of Zimbabwe, we have to come up with a criteria of how to short circuit the Lungu led govt. It was not the sixteen million Zimbabweans or the opposition which forced Mugabe to resign but a woman played a very important role of derailing Mugabe off track. No man can resist a shrewd woman. Iam calling upon women to set a trap for Lungu which will led to his downfall.

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    • All Economists are experts on solving Economic problems and are hired at high costs to advise governments but poverty never ends. How did the Africans survive without foreign aid before the colonialists came?

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  4. We have hit a dead-end. As a country, we ought to have had the eyes to see where we were going, long before we got there.

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  5. I have said it before and I will say it again – we can do without IMF.

    The breakdown in talks is a blessing because we are now free to look at other alternatives and our back is no longer against the wall. We should finally learn how to set up our own programs and stop depending on these institutions. The BRICS countries have showed that internal solutions can work better than external intervention.

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    • @Nine Chale, anyone who know how the world works will tell you that you cannot continue borrowing until IMF certifies you are “good”. So IMF is unavailable if you want to make a quick recovery.

      The choice is between a trained medical doctor and a traditional healer, to put it in real terms. I see you are calling for the later.

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    • Nine Chale, please explain how we can do without the IMF or without debt for the govt and at the same time keep our economy growing?? Since Chibamba Kanyama has talked nonsense please assist. I would really like to know

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    • Never mind @Nine Chale you are the selfsame bloggers who supported these reckless PF policies….you are no different to these politicians who do not want to take responsibility for this. As Chibamba Kanyama stated the interest rate on IMF loans attracts the barest of interest rates (presumed to be below 1 percent) not like those EUROBONDS with a whooping 9% interest rate; if these foools had any brains they would have invested wisely!!!

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    • Borrowing is borrowing, it does not matter who you borrow from. What is important is the ability to pay back. Only a fool will lend money to someone who can’t pay back.in Zambia consumption over takes production. It makes no sense to dig a hole to bury another hole, especially if you digging a deeper hole. Nine Chale think before you write.

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    • You can only succeed on your own when you have very shrewd knowledgeable leadership. How do you think we got here in the first place when we were OK a couple of years ago?

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  6. …does someone need to clarify why the breakdown with all those paragraphs..?…
    ..not a reliable customer to lend money to
    …recklessness
    …corrupt
    ….debt overflowing

    simple

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    • These id1ots in PF government are hesitant to go the IMF way. They would rather borrow from the Chinese who wont mind (monitor) about how the borrowed money is used. If Sata was not voted as president this problem was not going to be there. The man borrowed and spent money like there was no tomorrow.

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  7. Lungu and PF have blown Zambias chance of rapid development after blowing $17 billion with no production results or benefits.. …their only avenue to raise funds is more toll gates and more taxes and more selling off state assets to China and India.. ….period.

    Right now any shocks or wabbles to the world economy or weather pattern and Zambia will be in need of UN aid with theives we have in power

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  8. The likes of Mushota, & Terrible cannot offer tangible comments on intelligent topics like this one. They simply dismiss the article without reasonable arguments.

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    • Meanwhile they are duping they masses that they are a religious bunch who like national days of prayers…the good thing with numbers is that they don’t lie!!

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  9. People who are not in touch with the reality in Zambia will rubbish Chibamba Kanyama (CK) . Those who are in Zambia and want to pretend that all is well or don’t understand where we are heading, they will not understand what CK means . But those of us who are in Zambia and run business in major currencies under where this country is heading and the point CK wants to screw down the thick heads.

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  10. Once thieves have stolen alot of loot each one with enough to live a life 100x over the normal human life, do you think that these thieves will go to the IMF and disclose how much money they borrowed and later looted or stole for themselves?
    We are dealing with thugs who have no morals or human dignity.

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  11. UPND should consider replacing HH with this fellow tonga man Chibamba Kanyama.this man is a wise economist unlike Kainde who just bought his degree from unza!!!
    I WOULD VOTE FOR UPND IF KAMYAMA IS ADOPTED!!!
    the man speaks sense and this is a balanced opinion one would never get from HH.hope PF Govnt have heard this splendid advice.plus ECL should appoint Chibamba Kanyama as PS in the Ministry of Finance or National planning.as a country,we must benefit from such wise men!!WELL SAID SIR AND PLEASE PUMP SOME SENSE IN KAINDE IF HE IS TO START MAKING SENSE TO MANY ZAMBIANS!!
    NJIMBU BB 2017!!

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    • UPND does not need kaponya rats who are tired of dancing and sontaring….keep supporting lungu….

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  12. Please stop hallucinating and bringing this matter! Zambia doesn’t need IMF loans. If you do so you will lock yourself up in usuary forever. Mark my words. Better do with Eurobond. Amabank aya recruits abena Africa to lobby for them for a money! It is like HH selling Zambia.

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    • Look at the so called African consultant…..hellucenating demented gibberish……just go back to sleep.

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    • Sharon is better placed as an economical advisor to president Lungu than this communication journalist.

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    • @Sharon – Do you numpty know the interest rates on Eurobond or refinancing..I guess such things mean nothing!!

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  13. I knew one day his photo will come up for them! It is the same with Trevor! Got it? Too hard and complicated for an average UPND cadre to fathom! Paradise papers!

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  14. Indigestible material. I have headache. It’s all theory from Economists with no background in econometrics or calculus. are you saying the current finance PS is not respected, and his role should be duplicated by your friend nkulukusa? Or are you insinuating that bwana PS should be fired. Cool beans.

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  15. The extent to which PF mortgaged the country to finance their disputed election win is only being uncovered now and quickly burried by PF.. ….just a tip is the re signing of mopani mining licence in 2015 with a provision to pay fixed electricity costs for the next 40 years……pf were signing anything to get campaign funds…

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  16. Make no mistake, I like Chibamba is not personal but against the lobbying movement which has its butts pressing against someone big.

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  17. Haha ,you ditched Rupiah Banda who had the economy humming along at 6.4% growth ,BB+ ratings and record forex reserves and you voted in these clueless PF .

    You made your thorny bed ,now lie in it f00ls.

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    • RB had a few kickbacks via his sons while the economy was performing, forex growing, minimal borrowing…….now this lungu chap has a whole corrupt cabinet and state house staff while we sink deeper into debt…….his corruption is even reaching the whole civil service who think being called a corrupt theif is
      ” social mobility”

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    • Talking about RB , at least the man had class….he surrounded himself with presentable people like Dickson Jere not the Keizer zulus of our time , now even guards for RB are ministers like Lusambo….

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  18. Chibamba just recommend an amnesty for those with ill gotten wealth stashed out in accounts abroad to bring it back. Why seek a loan with harsh conditions attached from IMF when you have US$billions hidden out there? Why should common man suffer to cover the rich?

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  19. This means diarrhea for the country’s economy, before it gets constipated. Any wonder we are the third hungriest country on the planet! How damn we must be!

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  20. The real truth is Zambia is in deep sh!t, and it’s only a matter of time before the sh!t hits the FAN.
    “Let those who have ears listen”
    Jonathan is laughing all the way to the Bank!

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  21. Chibamba is making sense.we need to be objective and support progressive ideas meant to get us out of the fix we find ourselves in as a nation.God bless Zambia.

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  22. Felix Nkulukusa is good believe me, ask ba magande, ask ba Dr musokotwane or even ba chikwand but I think the team at the ministry must be re organised.

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    • Mutati may have gotten in too late, long after the vultures have had their sweet course, and disappeared.

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    • Mutati cannot be a good Finance minister. He’s not an economist. Your humble leader should’ve known that Mutati ia an accountant and not an economist.

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  23. We have prayed for the total collapse of this IMF deal. It’s not in the best interest of our country. The author seems to be hallucinating ad he is obviously looking for a consulting job . I urge him to do moredetailed research on Mozambique and the IMF deal. He will learn that Mozambique had realized the evil schemes hidden in the IMF package deal which didn’t sit well with the overall sovereign of that country. Let him study the issues of land grabbing by foreign countries and other foreign entities. This man failed to make an impact in DC, now he wants to mislead the nation .

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  24. Good points Chibamba and I hope ECL takes leadership on this matter.
    ENOUGH of being POLITICALLY CORRECT.
    Let us just do the right things.
    F#@K IT.
    MOVE THOSE BONDS TO IMF NOW!

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  25. The truth hates indeed. Its either you accept and get proper advise or rubbish everything and sink the whole the economy in a sinkhole. Our economy is in doldrums as it were, to employ novices like this finance PS chap is like hitting yourself in the stomach. The other day he was talking of contracting more debt to pay other debts but with longer repayment periods? Mutati and team are clueless cannons devoid on any economic know-how, acumen, empirical data and analyis and later on experience at this level. Heed the advise or drown in debt and destroy this country. Time for kaponya economics of increasing taxes left, right and center won’t help either.

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  26. I always read what this man puts out for our attention…I respect him and what he has achieved this far…obviously, for any reasonable person, what he has put it here is quite logical and with his inside knowledge of IMF and ZED govt…he stand on solid ground to advise and I think he has done well.

    This really is about saving our country…things are hard for the ordinary Zambian and failure to uplift their lives would be failure to govern…its an acceptable and surely it will show in 2021 if the status quo persists….

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  27. We don’t need IMF China is the best option to borrow from if need be. Otherwise we can survive own our own we just need to reorganize our economy the future prospects seems to be bright. Copper is poised to boom, more foreign direct investment in the energy sector with the continued good rains.

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  28. This is all regurgitated Economic verbature Kanyama is raving off without the decency of attribution to the real sources, what a lousy parrot. It’s this shallow mediocrity that is destroying Zambia where so called “Front Office” Communications Advisor at the International Monetary Fund, basically “chola boy” is an expert in Zambia. We hired a train station sweeper for president and the consequences are a disastrous sodom and Gomorrah! We never learn!

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    • @ 34 Musonda: Much as we may appreciate your disdain, it concerns me that you are not addressing yourself to the subject matter. You sound disgruntled. However, your disgruntlement is not about the subject matter, but rather about the object. That has been the dark side of Zambia, because, you, the educated and the wise, are always in hiding. You only show-up long after the station sweeper has executed his job, the best way he knows how. And must you now bewail the disastrous consequences of Sodom and Gomorrah? How nicer, if only we could read a better article by none other than you, along side that by Kanyama, and leave it to us to judge who is better, you or him?

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  29. I think Chibamba has undressed the truth and have given invaluable advise to the government.
    Mr. President and team (cabinet), leadership is about thinking, deciding and acting. Inspire us please.

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  30. Does Lungu and his criminal advisers listen? They have no idea on how to manage a modern functioning economy. Without Respect of Rule of Law, Good Governance, Respect for Human Rights and eradication of corruption no funds will flow to Zambia from IMF.

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  31. I like his recognition of Mr. Nkulukusa. The man knows his job and extremely professional in his dealings. I worked with him as Director EMD then and also PS EMF. I was privileged to have travelled with him. It’s just that good people don’t last. No wonder petty people like Mile Sampa failed to cope with him. It had to take the intervention of Hon. Chikwanda to transfer Sampa to the Ministry of Commerce.

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  32. @34 Meimatungu,
    You see, the difference between you and I is that I have an education and a mind to figure out intellectual snobbery even when it’s well coated in a wanna be intellectual veil! It’s gutless stupidity to belabour the point of balance of payments support from the IMF for a country like Zambia which can forego that trap by raising tax on copper exports whose prices are by the way at an all time high! Kanyama’s quest is all hogwash in futility, he doesn’t know anything and he better be advised to shut up!

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    • @ 39 Musonda: You claim to: “have an education… well coated in a wanna be intellectual veil!” Why may I not see you as trying to be over-creative with words?

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  33. Zambia must NOT take IMF loans! If you do it will be downward spiral. The development that we are experiencing will be choked! No country ever progressed under IMF loans! Be careful! “Experts” with connections will speak for the big conglomerates! That is why they were recruited to lobby their governments, nothing more! This friend was boss at ZNBC, a part of the reason he was fished out! Small minds in UPND cannot discern what is at stake! DON’T GRZ!

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