The International Monetary Fund says Zambia’s budget is under stress from significant obligations that have emerged in relation to fuel and agricultural subsidies, pensions, and road construction.
Head of the an International Monetary Fund team led by Mr Tsidi Tsikata visited Zambia from March 19-31 said there is an urgent need for action to contain the fiscal deficit in order to alleviate financing pressures that are keeping interest rates high and crowding out lending to the private sector.
Mr Tsikata said the Bank of Zambia’s recent action increasing the reserve requirements for banks is helping to stabilize the kwacha but noted that monetary tightening would be more effective if accompanied by fiscal tightening.
He said the Zambian economy is experiencing strong headwinds adding that policy uncertainties at home and external shocks are dampening economic activity.
‘In particular, the mining sector, which accounts for three quarters of the country’s export earnings, has been burdened by ongoing tax issues and by copper prices that declined to five-year lows in January 2015.
He added, ‘The kwacha has depreciated sharply against the US dollar since the beginning of the year, reflecting the general strength of the dollar and low copper prices, but also domestic factors clouding the outlook for the supply of foreign exchange to the domestic market.’
‘The annual rate of inflation has been falling steadily in recent months, helped by a series of reductions in fuel prices. However, the prevailing pump prices are not covering costs and contributed to payment arrears that led to fuel shortages in the country in early-March. The recent depreciation of the kwacha and the need to raise fuel prices will put upward pressure on inflation,’’ he said.
Mr Tsikata added, “The mission welcomes the recent easing of documentation requirements for VAT refund claims of exporters and urges the authorities to resolve the large stock of outstanding claims. The mission also welcomes President Lungu’s directive calling for a review of the mining tax regime that came into effect at the beginning of this year, which has had a negative impact on the sector. We hope resolution of the impasse will result in a transparent system applicable to all mines rather than mine-by-mine agreements that would likely entail the government foregoing substantial revenues to keep individual mines in operation.’’
“While pressures on the economy have grown, the challenges are not insurmountable. Resolute actions to contain the budget deficit, resolve the mining tax disputes, and foster policy coherence and stability would go a long way toward boosting investor confidence and unlocking the country’s high growth potential. IMF staff remains committed to working with the authorities on these issues.’’
They have gone to China to beg for some more kaloba… with no clue of what going on…
You can not lead a country in a global village with experience from drinking in Chawama.
What Zambia needs is brains not bodies
No matter how much time you give a clueless CEO to figure out why the company is underperforming, they will never come up with an accurate explanation.
Similarly, no matter how much time you give PF, these guys are ignoramus, they have no idea on how to fix Zambia`s economy. They`ve messed up the country but they`ve no clue on the way out!
The crisis in Zambia is a complex one. Just like a person who has cocktail of diseases, the Zambian economy is saddled in a mix of complex factors that require sophisticated minds to fix.
The solution for Zambia is to boot out PF and let smart brains run the country, otherwise Zambia is headed for disaster..
Ba LT why do always try hard to to defend the indefensible?
PF under Sata messed up things big times. Zambia had credibilty to borrow and PF abused it in the name of rampant infrastructural development which has now come to halt suddenly with contractors abandoning the projects for non payment.
The big, question Zambians in Zambia ought to ask them selves is, where is the money PF saved from removal of subsidies? Where is the money PF borrowed to complete infrastructural projects?
What these PF f00ls did not know is that, by stealing and privatising borrowed money, they have actually burnt their house, while they still want to live in it.
IMF is not and will never be your friend. IMF is a business which strives to maximise profit from poor countries run by stupid regimes like…
I wonder where PF will get the money to pay farmers this year if it is failing to pay the soldiers and civil servants on time.
This year all those who doubted the fact that PF ni ba chimbwi no plan will be forced by harsh reality to change their mind and begin to work against PF.
Its a pity really, that people had a chance to change the regime for the better but failed themselves.
IMF has sounded an alarm for Zambians to brace themselves for more hardships under PF.
Fuel will go up by end of April no matter what. And this fuel increase will trigger a series of price rises which even the PF will fail to control. If they do then, queues of UNIP era will come back.
If I was Lungu, I would sack Chikwanda because he has presided over a sinking economy while laughing off concerns with assertions that Zambia is way off stress levels in terms of borrowing. “40% GDP is the internationally accepted rate of borrowing” continues to resound in my head as this was forever on Chikwanda’s lips when challenged about borrowing.
I am sure today, Chikwanda is still sipping on his “French Red”, without a care on how and who will be paying for this debt. He has is salary, companies dealing with the mines and others renovating state house and the like. So whats there to worry for him?
I feel for our children…
It’s Zambia in the wild. Is there any way out of this PF jungle?
@Wanzelu, well done to host HH in London, he spoke something complicated for PF to comprehend. If only Zambians could understand what HH is good at, Zambians would call for a by-election before 2016. Next year is too far mannnn!!
@Nostradamus
Of course man, what HH talked about is all rocket science to PF minions.
The man charmed the international scholars with his well articulated speech on economic pragmatism based on his expertise.
He spelled out exactly what Zambia and Africa at large ought to do to improve their economy in real terms.
His speech was punctuated by applauses and people nodding their heads in agreement to his points.
He finally tackled all the questions thrown at him competently to the satisfaction of the majority audience.
We are organising another one at high level in which he will this time address a high powered business delegation.
Next he off to the States for more public speaking.
HH is the man, even Lungu knows.
INFINTU NI LUNGU,HH TOLD YOU THAT WHAT ZAMBIA NEEDS IS AN ECNIOMIST WITH PROVEN MANAGERIAL KNOWLEDGE AND SKILL.
BY THE END OF THE YEAR THE KWACNA WILL BE BEYOND ZWK 10.
PF NA FUTI INFINTU KUCHULA HAHA!
Painfully true! You reap what you sow. That saying has never been wrong.
Please as a people let us learn to be bold, the issue here is not the budget, but the poor leadership of PF. This poor leadership us resulted in lack of planning hence the over expenditure in everything this govt is doing. These people have no vision or foresight hence borrowing money in the morning and night when other are sleeping. Now we have a leader absent from a country for over two weeks when he has hardly served quarter of a year in office.
My fellow Zambians the answer to liberating Zambia from the circles of poverty lies in its people(Well educated Citizens)IMF or foreign investors are not key but part of the solution. We need to design our education system in such away that our products from these education centers become producers of tag able goods that we can sale locally first and when improved we can then sale abroad. behind these engines of development are the young breed of entrepreneurs with rare talent to turn our natural resources to finished products of first class goods. HH is the right kind of young leaders with practical skills and knowledge to lead Zambia to middle income country. My fellow Zambians lets not reduce HH to a tribe leader of the 19th centaury,but lets use him to create real wealth for our selves
The whole world is under stress and pressure from organisations like IMF and World Bank. I don’t trust them.
It is the last organisation we Zambians expect to get advice from. Let’s hear it from our very own economists and financial experts. We need home made advice to solve home made problems.
You must be joking…. you can only advice yourself when you have you own money, as long as you borrow money you have sold you advisory rights. Thats the way the world works.
Why do u go back to them if they are irrelevant? After messing yourselves like a baby, u go crying to the same IMF, WORLD BANK that u are demonizing.
You PF character please you have borrowed millions of dollars from these same institutions. How do you get Kaloba from Katondo then the next morning start condemning those same guys you just borrowed from?. Be serious with life.
@nine Charle you have got it wrong. Our economist and Financial experts can interpret the Zambian economy in terms of indicators but this indicators simply strives to explain the central tendency and do not represent real cases on the ground. Our interest is not to cook up statistical figures on paper that shows that Zambia is doing fine when many children go to school on an empty stomarch,The schools they go to have no education materials and when they get sick there parents can not pay there medical fees,let a lone provide decent meals at least three times a day. You analysis is like going to manda hill as tourist and go back to Europe and say Zambia is beautiful minus going to Misisi or Nabwalya in Mpika to see reality.
Stop being ignorant; there’s no such thing as “home made problems” when you live in a global economy. You’re the same people who’ll be begging these two institutions to write off Zambia’s GROWING debt.
Objectification is not the same as ignorance. Don’t just take a quick look but a deep glance at these institutions… have you asked yourself what is their aims and their plan?
I have taken a more studious look at them to arrive at my conclusion. I have even talked to people that play operative roles in areas of subjective advice. Most problems we face as a country have a lot do with the insatiable greed of the richer nations and their concept to keep other nations underdeveloped in the name of “globalisation”.
Though no one else might agree with me, my humble opinion cannot be refuted as far as reality is concerned.
No matter how much time you give a clueless CEO to figure out why the company is underperforming, they will never come up with an accurate explanation.
Similarly, no matter how much time you give PF, these guys are ignoramus, they have no idea on how to fix Zambia`s economy. They`ve messed up the country but they`ve no clue on the way out!
The crisis in Zambia is a complex one. Just like a person who has cocktail of diseases, the Zambian economy is saddled in a mix of complex factors that require sophisticated minds to fix.
The solution for Zambia is to boot out PF and let smart brains run the country, otherwise Zambia is headed for disaster.
This is what I have been telling this useless Pf govt from sata. These morons never listen. IMF has echoed the same sentiments. This country is going nowhere until they get serious with the following: 1. Deficit, which they created by awarding reckless salaries to govt workers without thinking; raise taxes to deal with this and tighten unnecessary expenditure 2. Wasteful RDA expenditure, 3. STOP Antagonizing the mines 4. Policy coherence and consistency, 5. Reduce size of govt, too many ministers who do nothing but passing gas. I could go on and on but I doubt these baggers have any guts to do anything right.
@jamakudi I totally a gree with, but add on direct stealing of the borrowed money using RDA which could be audited because it was brought to state house by Sata the master of all thieves of all times.He and Nsanda stole and stake a lot of money in Singapore via Turkey.Their Children will be withdrawing this money at a time our children will be paying this money back to Europe through taxes.What a shame,you are even shouting on top of your voice pabwato pabwato and fintu ni Lungu when you are being sold into slavery.Stupity Zambians to borrow KK’s words.
By the way if ifintu Ni Lungu wants to make it in this area, get rid of ALEXANDER CHIKWANDA.
A lot of money was taken to cover the illness of the president who collapsed during women’s day. Millions of kwacha was used to resuscitate the dying HIV Positive Leader.
…”actions to contain the budget deficit, resolve the mining tax disputes, and foster policy coherence and stability … boosting investor confidence ”
–NOT GOING TO HAPPEN with PF CLOWNS and INCOMPETENTS in Government !!!
We still have STUP!D Ministers telling us they are going to start a National AIRLINE!
With money from where?
Let Edgar Lungu resign. he is too movious and useless.
President lungu is the man we had all bin waitin 4
Sorry buddy. Not everyone has a share of the pie from that bloody black mountain. I am glad you benefitted but what about the others around you? Hope you are seeing the gloomy sad picture I see when I hear you singing eureka!
Did we really need someone from the IMF to tell us what Nawakwi, HH, Milupi, Chanda, Chipimo even I have been saying for so long. Its only PF who don’t seem to get it. And from the article the simple truth is that the central bank can do its part with Denny who seems capable but working with a dinosaur at the ministry of finance can’t be easy.
Meanwhile our visionless lazy President of an empty tin and his fossil finance minister Chikwanda are sight seeing and smiling like cheshire cats in China with a begging bowl in one hand…really laughable.
ECL will emerge winner. Do not worry. It is a matter of time
Winner against who? Kwacha?!
We are in quite a pickle. Imagine the dollar keeps going up, our debt becomes much greater than that 40% of our GDP.
we know the position of ECL on tax inversion but what is HH’s position on this one? ECL gave us a definite program on how he intended to reduce prices of milea mill but what is HH’s program? You see while ECL gave programs that people could look forward to whether he is in a position to actualize them or not HH gave none except to pose as one who is simply going to be a godfather to give to people from his pocket? You see,Zambians are not stupid! Go and tell your small god to be realistic next time instead of blaming President Lungu all the time!
Actually, HH made one of the most important undertakings (promise) in the January campaign, namely to introduce Cattle Loans as a serious poverty reduction measure. I am actually a Lungu sympathiser but I would hope Lungu was listening to his opponent.
. IMF
is clearly telling us we are under blackmail. No taxes from mines.rifrrfr
Imagine, at the same time they are talking about pressure of budget and want us to reduce taxes from the mines. How?
It seems most of the dim wits just love commenting to massage the egos of their mediocre perpetual political losers. South Africa right now has experienced a falling Rand and fuel, electricity and taxes have gone up. The country has been experiencing persistent power outages and their political scene has been a charade. We have Zambians living in their own utopia couched in their ‘ schizorphrenic’ world’s and you think Zambia is fantasy land aloof from the rest of the world? Keep your stolid fears to yourselves!
#16; South Africa is going through all those issues due to poor leadership under Zuma. Zuma concentrated on building his home at the expense of ordinary South African, and you want Zambia to take that route? No wonder PF supporters you are capable of supporting a vision-less leader and party, which is borrowing from everyone.
May be instead of constructing roads we should have been building power stations to sell electricity to the Southern Africa power pool. We could then use the money raised to build roads in a sustainable way.
@Kabulo Muleya, stop using that name if you do not know and understand its meaning. That name is sacred, blessedness and endowned with riches, sound in wisdom and knowledge by God the creator and yet has been hijacked and is being misused by a m.o.n.k.e.y like you – very sad indeed.
Address the international parity conditions in the kwacha exchange rate
assess its mean value long-term and effect fiscal and monitory policies that address those parity conditions
from the comments its like that is issue addressing short-term to long-term as opposed to reactive ineffective measures in omo or other
deepening the sector in products and solutions will help remove the pressure in financial resources and engineering on the kwacha
Much of Africa is now wide awake. Nigeria is one case in point. Meanwhile, Zambia is still asleep. In Zambia we still vote the traditional way – along tribal lines. It is the reason we have ended-up with such poor and sick leaders like Sata and Lungu.
Docile Zambia will remain the bottom of the box, ‘shame na shame’!!!
?@Mei Matungu, May be it is not right to give reference to the Nigerian elections. I would advise that you do your Nigerian elections results analysis before you expose yourselve to ignorance. Nigerian results and the trend of voting was exactly like what transpired in Zambia. One thing true is that Democracy is all about numbers and where you come from in the region. Just to give you snoptics on Nigerian elections; Goodlucky comes from state of Rivers and he got 98.4% while Buhari got 4%, because he hails from the north. But because North is densily populated Buhari was able to recover. Therefore it follows, where you come from matters the most.
@Rasco your Analysis may be correct to a certain extent but the truth is that people were tired of Boko haram and the economy was collapsing due to reduction in the oil prices. The death of Yaradua who hailed from the north was highly suspicious as it was alleged to have resulted from food poisoning. Good luck Jonathan was a suspect. All these reasons lead to the fall of one long standing political party in Africa’s most populous country ,Nigeria. The difference is that in Zambia people don’t care how poor they are as long as its there tribes mate ruling. They can even allow there wives and Children to abused by political leaders in the name of tribe. Elections in Zambia have lost meaning as they are simply a tribal contests without economic development as its top agenda.
Insane Money Fraudsters are liars who must not be given an ear. Enough is enough. IMF is not a panacea to Zambia’s problems. It lies with the people of Zambia themselves.