. Kanyama

“The IMF has done its Debt Sustanability Assessment for Zambia and I suspect it is of the view that additional non-concessional loans to the country are presently unsustainable. Debt sustainability in IMF terms simply means your current position does not have any more space for you to borrow anymore because what you will earn is far below what has to be paid back!
The numbers do not lie. Debt servicing in terms of interest repayments takes nearly a 25 percent of the budget. The Minister of Finance Felix Mutati has equally acknowledged that Zambia, in terms of its debt profile,  is not in a healthy position to contract any new debts.
For instance, he is on record admitting that the financing of Lusaka-Ndola dual carriageway should be a hybrid of financing options because the projected budget of US$1.2 billion for the project is beyond the reach of the country’s capacity to repay.
What must be appreciated is that the country has a lot more other financing needs, from the US $7 billion budget beyond interest repayments on debt. Remember this is the debt on the money we have already consumed. The temptation to accrue more debt is huge because the international financial market is saturated, lenders desperate to offload loans to governments that are willing to pay a premium irrespective of a worrying debt assessment.
With the copper prices rising, we may feel for now our capacity to repay is improving and yet the commodity market remains unpredictable. I am sure the World Bank and IMF are still of the view that the current upswing in commodity prices is not sustainable as China still wants to focus on domestic consumption.
An IMF programme is critical for Zambia, even though there are signs of economic stability. Zambia still faces potential shocks in its balance-of-payments position and we are better off sending a signal to jittery creditors that the country will be firing on all cylinders once the IMF programme is implemented.
I am happy to read statements from the Minister of Finance that government is reconciling critical financial benchmarks to pave way for an IMF programme. IMF is a hugely focused institution and timely engagement with the Zambian authorities is important. I am very confident once we provide full disclosure on our current debt obligations, slow down on the contraction of non-concessional loans and meet these IMF benchmarks, we should be on an economic stabilising programme.”

Chibamba Kanyama worked as a communications advisor at the IMF until 2016 and he is a leading business leader and writer, specialising in communication strategy and economics.