CABINET has finally approved Zambia’s engagement of the International Monetary Fund to help control government over-expenditure to sanitize the economy, according to chief government spokesperson Kampamba Mulenga.
In a statement today, Mulenga said the country needed foreign support to deal with current high deficit and debt levels.
Finance minister Felix Mutati is next week expected to lead a Zambian economic team comprising Bank of Zambia governor Dr Denny Kalyalya and Secretary to the Treasury Fredson Yamba, among others, to the IMF/World Bank spring meetings in Washington DC at which the economic aid package of about US $1.3 billion is expected to be finalized.
“Cabinet at its sitting on 11th April 2017 authorised the conclusion of discussions with the IMF on its support to our home grown programme. This followed progress made in the initial programme discussion during the IMF Mission to Zambia from 8th March to 24th March 2017,” Mulenga stated. “The nation may wish to note that the IMF approach has evolved from prescription to engagement. IMF programmes now emphasize ownership of programmes by countries. The IMF also emphasizes on policies that focus on social protection, inclusive growth that has potential to create jobs and reduce poverty including ring-fencing of programmes in the health and education sectors. The IMF has done away with structural conditionalities such as wage freeze as these had a negative impact on poverty.”
She stated that the government was on course with stabilising the economy and ensuring higher growth rates going forward.
Mulenga stated that government expected the coming on board of the IMF to help raise the profile of Zambia internationally.
“In order to assure the continued success of the economic stabilisation and growth programme in addressing these risks, it is necessary that IMF supports government’s economic programme, in particular elevating gross international reserves and providing balance of payments support,” stated Mulenga. “This engagement will attract more assistance from cooperating partners and boost investments.”
The government has been dillydallying to engage IMF over an economic recovery programme for fear that it might not be able to handle stringent controls of government wastefulness that come with conditionalities for the soft loan.
The government, which increasingly was becoming autocratic, was reluctant to have the IMF on board due to demands of good governance required of economically-ailing countries.