Minister of Finance and National Planning Dr. Situmbeko Musokotwane says the International Monetary Fund (IMF) board is expected to meet and give Zambia a programme by the end of this month.
Dr. Musokotwane explained that once this happens, the IMF would be able to give the country a loan adding that the official creditors providing financing assurances has paved the way for Zambia to secure the $1.4 billion bailout package.
Speaking during a media briefing monitored by the Zambian Business Times-ZBT, Dr. Musokotwane said this means Zambia must prove to the creditors including the IMF and the World Bank that the country is capable of managing its affairs properly.
He noted that in the next coming months, government and the official creditors would have discussions on how to restructure the debt to which government is committed adding that similar discussions will be held with private creditors.
The Minister said creditors agreeing to restructure the country’s debt unlocks further assistance from the IMF and other multilateral agencies noting that this is important because after debt restructuring, debt will be sustainable but not comfortable and will need to be serviced therefore the need for extra financing.
“Money was given to us by IMF last year, Zambia got 1.3 billion equivalent to dollars, just a gift never to be repaid, part of which is being spent in this year’s budget but it’s not sustainable too because at some point the money will finish and you still have a mountain of debt”, he said.
Dr. Musokotwane added that borrowing money after debt restructuring is still important because the country will still need to service its debt and remain with enough money to spend on social sectors such as health and education.
He said a year or two ago, out of K1 collected in tax revenue, 90 ngwee was spent on debt service and salaries of public workers with nothing left for anything else.
The Minister mentioned that cancelling unsustainable projects financed by debt is one of the measures to address the debt situation and government has put a law in place, which says for government to acquire external debt loans, parliament must agree.
Dr. Musokotwane added that the law also states that at any given time, the country’s level of indebtedness compared to the size of the economy will not exceed a certain level adding that the law will make it difficult for anyone to get the country back into a debt crisis.
