By MAIMBOLWA MULIKELELA –

ZAMBIA needs to address infrastructure gaps, strengthen project selection procedure and prioritise capital spending to cushion debts shocks, the International Monetary Fund (IMF) has said.
The IMF additionally implored the Government to develop a comprehensive debt management strategy that will help address public debt vulnerabilities.
Government said recently that Zambia’s public debt was sustainable in the medium to long term on account of strong macroeconomic performance that country had experienced.
Secretary to Treasury Fredson Yamba said the Government would put in place contingency plans to mitigate liquidity risk at the time of maturity of the US$750 million and US$1billion sovereign bonds respectively.
However IMF executive directors noted that Zambia’s moderate risk of external debt distress calls for prudence in borrowing on commercial terms.
The directors said it was important for the Zambian Government to come up with a comprehensive debt management strategy to address public debt shocks which currently stood at US$4.8 billion.
The directors said this in a statement in Washington DC, when they concluded the 2015 Article IV consultations with Zambia.
On the other hand, the IMF supported the commitment of the Bank of Zambia (BoZ) to maintain a tight monetary policy stance to contain inflationary pressures.
They stressed the importance of continued exchange rate flexibility and rebuilding reserves to provide adequate buffers for the economy.
They said the financial sector remained well capitalised and stable, and commended the strengthened banking supervision.
“We recommended continued efforts to enhance financial inclusion, including improving access to financial services in rural areas,” they said.
Interest rate ceilings were an area of concern which the IMF recommended should be eliminated.
“We note that poverty remains high, particularly in rural areas. To foster job creation, inclusive growth, and economic diversification, we encourage the authorities to improve the business climate by restraining labour costs and ensuring a stable regulatory environment,” they said.
It was also recommended that action be taken to address infrastructure and electricity supply constraints, develop skills and rationalise farm subsidies with a reallocation of resources to the social cash transfer programme.