LATELY, the debate on the anticipated International Monetary Fund (IMF)’s bailout package for Zambia has taken centre stage.
While similar talks were there years back under former President Edgar Lungu’s administration, the topic has almost reached a climax under President Hakainde Hichilema.
This follows Finance and National Planning Minister Situmbeko Musokotwane’s announcement on December 3, 2021 that the Government and the IMF mission to Zambia had reached a Staff-Level Agreement on a programme under the IMF’s Extended Credit Facility (ECF).
The IMF programme envisages provision of financial support of US$1.4 billion over the next three years, subject to approval by the IMF Executive Board.
This will be in addition to the US$1.3 billion Special Drawing Rights (SDR) allocation that was received in August 2021.
According to Dr Musokotwane, reaching a Staff-Level Agreement was one of the immediate objectives of the New Dawn Government and a directive by President Hichilema that the ministry should finalise negotiations with the fund that had protracted for years, within the shortest possible time.
It is comforting that the IMF programme will provide much needed fiscal space to Zambia especially that the country is coming from a backdrop of having a huge debt stock accumulated by the former regime.
We, therefore, agree with Policy Monitoring and Research Centre (PMRC) executive director Bernadette Zulu and financial analyst Mutisunge Zulu’s submission that the IMF deal is appropriate.
There is no doubt that the economic and financial policy package will help Zambia to restore debt sustainability, build a productive and resilient economy, and sustain the livelihoods of our people.
It is undeniable that Zambia’s debt situation is currently unbearable and hence it is hoped that the IMF Staff-Level Agreement will pave the way for debt restructuring talks with the country’s creditors.
Like Dr Musokotwane put it, it is true that having an IMF programme in place will boost investor confidence and move the country’s economy towards a sustainable economic growth trajectory.
On the other hand, some sections of society have argued that the IMF supported reform programme for Zambia, as it relates to the removal of subsidies on energy and agriculture, will disadvantage the economy.
While it is true that the cost of living will go up when the said subsidies are removed, it is our expectation that the new measures won’t be implemented in a hasty manner.
The New Dawn Administration must implement the reforms in phases gradually to minimise the impact on citizens and industries.
In fact, Dr Musokotwane already clarified recently that the anticipated reform program will be anchored on Zambia’s own commitment to develop and chart its own destiny so there is no need for citizens to be anxious.
We have been told that the reform programme will encompass fixing inefficient supply chains in the energy sector and remove excesses in the Farmer Input Support Programme (FISP) that have negatively impacted on the fiscal position of the country.
Zambia will also have to reform the electricity sub-sector by migrating to cost reflective tariffs to attract investment.
According to Dr Musokotwane, the rationalisation of these expenditures, will free up more resources that will be channeled to the poor and vulnerable in society through the social cash transfer programme.
It will also enable Zambia to effectively provide free education, free and proper medical care for our people, as well as scale up youth and women empowerment programmes.
With these interventions, Dr Musokotwane assured the nation that Zambia will surely be able to once again start talking about inclusive growth where no single person will be left behind.