Zambia has won International Monetary Fund board approval for a $1.3 billion support package, a important step toward the nation restructuring its debt and a boost for the global effort to help indebted developing nations.
The IMF said in a statement that the 38-month extended credit facility is based on Zambia’s “homegrown economic reform plan that aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.
The program will also “catalyze much needed financial support from development partners,” enabling an immediate disbursement equivalent to about $185 million, the fund said.
The Executive Board’s decision will enable an immediate disbursement equivalent of about US$185 million.
Following the Executive Board discussion on Zambia, Ms. Kristalina Georgieva, Managing Director, issued the following statement:
“Zambia continues to face profound challenges reflected in high poverty levels and low growth. The ECF-supported program aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.
“Restoring fiscal sustainability will require a sustained fiscal adjustment. The authorities’ adjustment plans appropriately focus on eliminating regressive fuel subsidies, enhancing the efficiency of the agricultural subsidy program, and reducing inefficient public investment. Domestic revenue mobilization also needs to support the medium-term adjustment. The adjustment creates fiscal space for increased social spending to cushion the burden on the most vulnerable, help reduce poverty, and to invest in Zambia’s people. The ongoing expansion of the authorities’ Social Cash Transfer program and their plans to increase public spending on health and education are particularly welcome. Together with the fiscal adjustment, Zambia needs a deep and comprehensive debt treatment under the G20 Common Framework to restore debt sustainability.
“A substantial strengthening of fiscal controls is needed to support the fiscal adjustment, as well as address governance and corruption vulnerabilities. Public investment management and procurement practices need to be strengthened to ensure transparency and the efficient use of scarce resources. It will also be important to bolster the framework for monitoring fiscal risks, particularly those related to large state-owned enterprises.
“The Bank of Zambia should continue its efforts to reduce inflation and preserve financial stability. International reserves should be replenished as conditions allow and the exchange rate should continue to reflect market conditions. Addressing high NPL levels and ensuring adequate capital buffers will also be important.”
Zambia had been seeking endorsement from the Washington-based lender for over three years as the government tries to finalize negotiations to revamp external liabilities that grew to $17.3 billion by the end of last year.
Chinese lenders account for more than one-third of its official dollar debt.
The IMF had needed assurances from Zambia’s official bilateral creditors that they were willing to renegotiate.
Those came on July 30, opening the way for the board to consider the bailout request after reaching a staff-level deal in December.
Zambia applied to restructure its obligations under the Group of 20’s Common Framework guidelines, which brings together members of the Paris Club of mostly rich creditor nations, and China, which has become the world’s biggest official lender.
Beijing was reluctant to join at first, preferring to negotiate separately.
“Securing timely restructuring agreements with external creditors will be essential for the successful implementation of the new ECF arrangement,” the fund said.
Much work to do with import substitution……….
Especially in the mines supply chain………
95 % of all consumerbles in the mines should be made in zambia.
We are expecting.
well done HH! It is all about international confidence which nawakwi , kaizer and nakachinda failed to build. This is good for our country. Pz HH continue with your dynamic good work and unique leadership
kudos to the GOVT and its party.Use the money wisely please.
Well done HH & UPND govt. May you please act responsibly with this relief & continue to tighten the screws on corruption. This relief will mean nothing if it doesn’t filter through to benefit majority poor Zambians. We watching you.
You cannot celebrate SAP without knowing the conditions attached to it. Don’t be f00Ied by this.
Remember 1991 to 92. This is how it started with imf SAP which later led to privatisation where hh made billions at poor people expense
But PF when in power was equally pursuing an IMF package. The only difference was that IMF could not trust your party with dollars, ba Zulu
SORTING OUT PF MESS AND UTILIZING IT FOR GOOD USE INSTEAD OF EMPOWERMENT FOR VOTES
Good going to His Hexcellency Hetch Hetch. The Panga Family only delivered unprecedented levels of corruption, poverty, economic malaise not to mention bad governance bordering on dictatorship. Any comment from Kaizar the Klown?
Yes, you can celebrate the bailout. But just know that before you cannot again recruit more civil servants (teachers, health workers and extension workers) before you first pay back that $1.3 billion. Those are the IMF conditions whereby you mortgage the country’s sovereignty to the IMF. Ask Ghana why they are always going back to the IMF and caught up in a perpetual cycle of debt and poverty. Even the Cedi has undergone further devaluation much to the dismay of the country’s business community.
I meant to write that: Yes, you can celebrate the bailout. But just know that you cannot again recruit more civil servants (teachers, health workers and extension workers) before you first pay back that $1.3 billion. Those are the IMF conditions whereby you mortgage the country’s sovereignty to the IMF. Ask Ghana why they are always going back to the IMF and caught up in a perpetual cycle of debt and poverty. Even the Cedi has undergone further devaluation much to the dismay of the country’s business community.
KZ, for your own information, this is one of the few Home Grown bailout. What this means is that Zambia prescribed its own condition. The difference with the SAP you are referring to without much knowledge is that this is based on social spending. Government has been praised by IMF for introducing Free Education and for recruiting Health and Education workers. In SAP it was reducing workforce. No the difference my brother.
If you can stimulate the economy and get mining going, this $17bn is easy to dismantle. Every country has debt, Zambia’s sustainable debt level is about $6bn.
welcome poverty
Thanks to PF’s reckless borrowing and theft, we were already in poverty.
“A substantial strengthening of fiscal controls is needed to support the fiscal adjustment, as well as address governance and corruption vulnerabilities. Public investment management and procurement practices need to be strengthened to ensure transparency and the efficient use of scarce resources. It will also be important to bolster the framework for monitoring fiscal risks, particularly those related to large state-owned enterprises.”
That is what economic diplomacy does, if wine and Jameson bibbing play boys in the PF government did not know. Instead of flying around to watch half n_a_k_e_d girls dancing in Eswatini and sipping champaigne on Eagle 1 for 7 years, this UPND government has delivered real change and given hope to Zambians.
This is good. Govts should not be afraid of loans. We develop through them. PF was just OK to borrow and so is UPND. We should just be Ready with the conditions attached… Many Govt have failed with IMF loans because they failed to explain to people the conditions… So far we never head anything regarding the conditions
Celebrating debt
Why is it that the majority of those despising this bail out are PF? Surely we all know you tried with all your means to get it but failed because your economic plans were heading backwards (Dununa Reverse). If you don’t know what bail out means, ask Sri Lanka how much they need it like yesterday. It is time we Africans start learning to live within our means and borrow responsibly. PF was just reckless and became chumbu munshololwa and if you think they were not, ask yourself why we needed this bail out.
This is a good debt which should be widely celebrated. So how were you going to structure your UNSUSTAINABLE debt without this bail out
PF the mother of all evil, chasing IMF bail out, not given, their colleagues are given ati kaloba, ati masebela bati
Immediately the news broke, kwacha started gaining strength.
Razor above, celebrating kwacha gain and yet the same people are in my DMs asking for money
Spend it wisely, and sparingly – it does disappear quickly!