INTERNATIONAL Monetary Fund (IMF) says it remains committed to reaching a deal for a credit facility that will support Zambia’s efforts to maintain macroeconomic stability for its citizens.
This is despite President Edgar Lungu’s outbursts against the IMF on declining Zambia’s democratic credentials and rising cases of dictatorial practices.
The IMF might grant Zambia up to US $1.3 billion in a three-year credit facility to help plug a budget deficit of around seven per cent and stabilize the country’s economy.
According to official information, a decision would be made on Zambia’s economic recovery package by its board in August but that IMF was worried about President Lungu’s heavy-handedness in dealing with dissenting views, which included the independent media and opposition political leaders.
But during the press briefing last week, President Lungu said: “…I don’t think the IMF would like this country to go into flames, I don’t think any investor would like to see this country destroyed, the measures that we have put in place are intended to safeguard the IMF program if it comes to be but for the IMF to say ‘Lungu has gone out of the way’, I will refer them to Article 31 of the Constitution which gives me that power. Everything we do, we consult and I want to be remembered for just sticking to the law and doing things within the expectations of the people. So IMF, if they want to go because of this, they can go and I am saying this openly, if IMF thinks we have gone beyond the norms of good governance and democracy, they are free to go. We cannot sacrifice the Zambian people at the altar of economic expediency. What are we investing for? We invest the money today and tomorrow they burn the money up? No, as long as the people are safe, the IMF, their programme will be safe but if the people are not safe and infrastructure is being burnt left right and centre, we have to spend money to build those markets again, we have to spend money to put the electricity pylons, this is what the IMF would like? I am sure the IMF would not like that kind of thing. The IMF would like to come into a country which is stable, growing, and where they are sure that their money or programmes will yield desired results. But I have made it very clear that if they think I have gone astray, let them go.”
Reacting to President Lungu’s press briefing, Dr Baldini said the IMF was still optimistic Zambia would land an economic recovery package to help its distressed economy.
“Zambia is a member of the IMF and we have a good working relationship with the authorities,” said Dr Baldini in a emailed response to a query. “IMF staff and the Zambian authorities have agreed on the remaining actions that are needed to reach staff-level agreement. IMF staff remain committed to this process and continue to support the authorities’ efforts to maintain macroeconomic stability for all Zambians.”
According to sources close to the transaction, the negotiations for an aid package between Zambia and the IMF had stalled over disagreements on how the government was going to achieve fiscal consolidation but cutting curtailing excessive expenditure while at the same time maximising revenue collection