IMF confirms shelving bailout talks with Zambia over large govt debt

THE International Monetary Fund has confirmed putting on hold bailout talks with the Zambian government after it unveiled large borrowing plans it believed threatened sustainability.

During a briefing in Washington yesterday, IMF communications director Gerry Rice said in response to a question on the Bretton Wood institution’s engagement with Zambia that discussions on a $1.6 billion bailout package were put on hold in August.

“There’s one other question on Zambia and the status of the IMF relation with Zambia. So let me take that. Where we are on Zambia is that discussions on a new arrangement were put on hold in August of this year after the authorities unveiled large borrowing plans that we believe threatened that sustainability,” Rice said.

He said discussions with Zambia needed to progress.

“So during the Annual Meetings and during a follow-up set of meetings actually led by our Africa Department Director Abebe Selassie, who made a recent visit to Zambia, the authorities expressed their will for a speedy re-engagement with the Fund. Where we stand is that while progress has been made on several elements of a prospective program, the discussions will need to progress and provide greater clarity, including on fiscal policy commitments and credible borrowing plans consistent with debt sustainability,”

Rice said.

He said more data on Zambia’s borrowing was being awaited before talks could resume.

“So we’re just essentially waiting for further data and details on the government’s external borrowing plans, and then we would field a staff visit to update the macro framework and discuss the way forward,” said Rice.

The government has budgeted for almost a billion dollars (K8.6 billion) for road infrastructure in the 2018 budget when the IMF had advised that huge expenditures on such projects should be rationalized.

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