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IMF aid will restore lenders’ confidence – Stanbic Bank

GETTING on an International Monetary Fund economic recovery programme will convince lenders that Zambia’s future borrowings will be for the right reasons, says Stanbic Zambia head of global markets Victor Chileshe.

Chileshe said in the absence of an IMF programme, Zambia’s future loans to help fix the current financing deficits would be contracted at higher interest rates as the country was currently perceived to be high risk.

He said it would help to improve the country’s risk profile if Zambia got an IMF programme.

“The benefit of an IMF programme is that it opens up a lot more opportunities and access to cheaper finance for country,” Chileshe said last Friday after presenting Stanbic Bank Zambia’s view on the Zambian economy. “So you have multilateral and bilateral lenders convinced that you are borrowing for the right reasons…and also what you are paying as interest begins to come down  [because] your country’s risk profile comes down.”

He explained that Zambia currently needed to make itself attractive by engaging in an aided economic recovery programme.

“The absence [of an IMF programme] will add a lot more interest [rate on Zambia’s loans] and in some cases, it will close up other avenues of borrowing,” Chileshe said.

An IMF team is currently in the country discussing with the government over the state of the Zambian economy.

Although there has been a lot of anticipations on Zambia signing up on economic recovery programme specifically to help correct the country’s balance of payment, there is a lot of resistance on the part of President Edgar Lungu who fears the aid package would demand greater scrutiny of the government’s economic affairs and governance practices.

The economic recovery package was expected to be concluded this March but according to government sources, it was highly unlikely.

The IMF team delayed the trip to Zambia in the hope that President Lungu might warm up to the programme.

And Chileshe explained that the current kwacha stability was due to reduced imports as the local currency made imported goods expensive.

Chileshe said although the kwacha was expected to weaken against major convertibles, it was highly unlikely the local currency would experience a lot turbulence.

He said the declining trade deficit indicated a fall in the country’s imports.

“The stability in our currency that we are seeing this year is not as a result of exporting more or earning more [from exports]; it is as result of us importing less,” said Chileshe.

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