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Monday, September 13, 2021

WILL ZAMBIA FINALLY CLINCH THE IMF DEAL?

Columns Feature Column WILL ZAMBIA FINALLY CLINCH THE IMF DEAL?

By Chibamba Kanyama

The IMF Director of African Department Abebe Aemro Selassie has indicated the application by Zambia for funding will be assessed soon. This statement has been widely followed globally given Zambia’s debt situation and its recent default on a due payment to Eurobond holders.

I personally know Abebe and consider him to be a down to earth and ethical Ethiopian national who is currently heading a top position at the Fund. As Head of the Department, his recommendations on Zambia will certainly carry a lot of weight within the IMF ranks. However, his assurance to assess the request is no guarantee of a favourable outcome. There are a lot of layers within the governance system of the IMF that are involved in programme approvals. Key departments within the Fund will make their own assessments according to set evaluation benchmarks.

Whatever the case, there is one positive at this stage: The IMF Director for African Department personally made a visit to Lusaka, barely a month after appointing Preya Sharma as Resident Representative, replacing Alfredo Baildini who was recalled in July 2018 (I was heavily bashed for tweeting a Baldini replacement would take a while). Given the small size of the delegation and (few) number of days spent, it is also clear the visit was an installation mission of the New Mission Chief for Zambia Alex Segura-Ubiego and Sharma as Resident Representative (Mission Chiefs generally install Resident Representatives). The real takeaway, therefore, is that the Zambia-IMF relationship has been restored and at a time when the creditors desperately looked forward to this initial step!

I am very positive the IMF is serious about supporting Zambia. It has in the past months keenly followed the events about Zambia and, as expected of the IMF, its assessment is in part due to possible spillover effects if Zambia’s appeal for help does not receive serious attention. The IMF first received serious request for support from Zambia in May (meaning all earlier pronouncements by Government that it had approached the IMF may just have been intentions).

WILL IMF COME ON BOARD?

The prospects for a Fund programme are summed up in one sentence taken from Abebe’s end of Mission Statement, “We look forward to the presentation of the government’s home- grown economic strategy, and will be assessing in the coming weeks how the IMF could support the authorities’ reform efforts through a possible Fund program”

This is like writing a letter to your uncle, ‘I have read your request for help and will be looking into it after analysing your intentions to cut down on alcohol, divorce the second wife, send away those many dependents you are keeping.’

I am not very sure I have full details of what the home-grown economic recovery strategy is but I know that in September this year, Government approved the Economic Recovery Plan (ERP) whose focus is a move toward economic stabilization; push towards economic recovery and a growth plan aimed at restoring macroeconomic stability and debt sustainability while diversifying the economy. This seems to be the Zambia Plus that is yet to deliver on fiscal consolidation.

The key issue is the level of government commitment required to attain these benchmarks in order to get the IMF support. Does government possess enough courage to embark on serious stabilization measures just before the 2021 elections given that some of the expectations involve halting infrastructural projects, stopping borrowing, and spending prudently? Or could it be government hopes to secure the program now, negotiate for part financial injection but implement full programme after the elections? If IMF buys into the latter, it would be a wise move but requiring commitment from all political players given the uncertainty of elections.

The IMF team met President Edgar Lungu and probably this gives an indication there is executive commitment to implement what the IMF is looking for. I am personally lobbying for IMF support towards Zambia because the results will eventually be good to every citizen. It is for this reason I support any kind of commitment that Government will make in ensuring we get the IMF on board.

My advice to government would be for us to go for a big new medium-term expenditure framework that will change the outlook materially and we can be on a happy road to recovery!

 

 

 

22 COMMENTS

  1. I truly hope that IMF will NOT give more money to Zambia. It will only disappear in the pockets of Edgar China Lungu and his band of thieves!

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  2. This guy is full of I know this one personally, we are not interested in that. Just analyze and remove personal issues, now come on

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  3. From the looks on the guy on the right in the picture, I doubt we have anything favourable. What more with historical lack of prudence. God save us

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  4. Just how did we even get here….Now Zambia is officially the biggest beggar in the World! With the biggest begging bowl …..makaka bandits Pompwes PF useless mwankoles

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  5. I don’t think the IMF are so fickle to give money to lungu just before elections…..

    The IMF should make it clear that they are monitoring the situation and will only make a decision after the elections based on GRZs commitment to economic prudence….

    Lungu will be forced to curtail bribing his PF thugs and general bublic to vote for him , at the expense of economic recovery.

    If IMF do this , Zambia can forget funding from IMF because lungu can never win any free and fair election and needs to bribe everyone…

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  6. IMF will carry out it’s own assessment on the political will and economic management in Zambia. My take is that a new crop of leadership in Zambia that can demonstrate among other things good governance, rule of law, transparency and accountability would go well and create enthusiasm to help with the ranks of IMF.

  7. Where are the Chinese?Have they
    Surrendered?Why go to IMF again
    And again? Just handover chambia to Chinese as another of
    Chinese province.

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  8. Just delay giving Zambia any money until we have honest people in control.

    We all know who benefits from the money lent to Zambia. And it is not citizens outside top government officials.

    Our leaders can not account what they did with the Euro bonds or other loans.

    We even have cadres that previously worked as lab cleaners now opening up clothing brands in Switzerland, even owning a jet.

    We also have those that stole from a widow, and were peeviousky always seen drinking in shanties. Now they own mansions in Swaziland and sponser terrorism.

  9. … I am personally lobbying for IMF support towards Zambia because the results will eventually be good to every citizen…

    Mr. Kanyama, yours is a rather incomplete analysis. You want IMF relief money in the hands of people whose biggest claim to success is infrastructure spending, yet we owe for the Kazungula Bridge to the point where the contractor had to stop work? The Indian funded infrastructure claimed, without shame, a result of their genius, the lot who must pay back money they illegally and greedily grabbed for themselves because they feel more deserving than other Zambians? People who, in the 11th hour, have found the energy and resources to cover the country in monetary donations and bribery schemes reaching into millions.

  10. If 9 years and $18 Billion is not enough for you to assess the character and competence of this government, I am personally forced to start questioning your credentials. Sober mindedness for its own sake is meaningless.

    Botswana, by the way is spending and saving at the same time in their $6 Billion Pula Fund. Spending and saving are not mutually exclusive. You just need smart people like the leader in Botswana.

  11. PF govt, from Sata to Lungu, has received way too many loans. Even if IMF, on whatever basis, extends them this debt what PF has shown is the incapacity, inability & unwillingness to fiscal management. PF govt does not have a clue to manage money or grow an economy. Full stop. If IMF gives them this debt, it will just be for elections. After that it will be all down hill

  12. No one wishes Zambia ill. If you were a wealthy father and had a prodigal son, you should not be deemed to be cruel if you deny him any help and he becomes destitute. The PF government led by the humble one, have brought this upon themselves. They have squandered the estate on infrastructure that has no bearing on the immediate economy. We could have done without bypasses but with a viable Nitrogen Chemicals of Zambia producing cheaper fertiliser. We could have done without white elephant hospitals, but a viable Mulungushi textile adding value to our cotton. We could have done without hundreds of houses for security personnel, but empowering them with subsidised mortgages to buy and build on their own. We could have done without Kafue hydro, but with new solar power all over the country…

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