The International Monetary Fund has confirmed that it has not processed Zambia’s request for emergency Covid-19 assistance because the country has unsustainable levels of debt.
IMF Director of Communications Gerry Rice confirmed that the Zambian authorities have requested emergency assistance from its international partners, including the Fund in addition to an earlier request from Zambia for Fund support for their broader economic reform program.
Dr Rice reiterated that any IMF financial support, including emergency financing, is contingent on steps to restore debt sustainability.
He was speaking during a regular virtual press conference with Journalists from across the world at the IMF Headquarters on Thursday evening.
“As indicated in last year’s Article IV consultation with Zambia, and as published in the report, there, for you to look at, Zambia’s public debt is on an unsustainable path, under current policies, as the Minister said in February, and we note the government’s commitment to restore debt sustainability through fiscal policy adjustment and debt management. So, that’s where it stands,” Dr Rice said.
“Let me also say this to try and help and explain the context. It’s the Fund’s role to help countries address their medium-term viability, economic viability, and we are always and everywhere prepared to perform this role. That’s what we do,” he stressed.
“Our rules are there to help us keep a laser-like focus on designing programs that will work to help the country escape its problems, and they reflect decades of experience, really, of what works and what does not. So, I say that because particular care must be taken in unsustainable debt situations. Why? Because a poorly designed program can make matters worse for a country and its citizens.”
He added, “So, it’s important to get that right, and with strong commitments and actions, by a country and its creditors, a way forward can be found, which we can support, and, again, we always try to make that happen as soon as possible. You know, I won’t speak for other international institutions, but I know they are as dedicated as we are to resolving problems, and, again, more recently, in the case of Zambia, the authorities have expressed their intention to restructure Zambia’s debt, and, in this context, to hire debt advisors.
“So, the bottom line is, on all of that, is we continue to have active discussions with the Zambian authorities on their economic response to the pandemic, as well as their medium-term macroeconomic objectives and policies.”