The International Monetary Fund – IMF has re-affirmed that the Zambian government has stayed the course and is broadly aligned with the commitments agreed under the staff level agreement, setting a good base to get the IMF facility.
Responding to a question from Zambian Business Times – ZBT, Allison Holland, IMF Mission Chief for Zambia stated that “the [Zambian] authorities have shared key parameters of their economic reform program, which are broadly aligned with the commitments agreed under the staff-level agreement, and that are aimed at the overarching goal of restoring growth and fiscal sustainability.
Holland further stated that the Zambian “authorities have already begun implementing important reforms, such as increasing transparency in the procurement processes, enhancing control of budget spending and indebtedness, and moving towards cost-reflective tariffs in fuel products.
She stated that these reforms will support the IMF program once it is approved. When asked as to what the conditionality’s for the $1.4billion facility would be, Holland stated that full details would be availed after the program is approved.
“Once the program is approved by the IMF Board the full details of the program will be published – including all the reform targets and goals that will be monitored under the 3-year program”, the IMF mission chief to Zambia stated.
When asked when the IMF program would be availed to Zambia with concerns that the June timeline is fast approaching and this is affecting the national budget credibility? Holland restated that Zambia is in debt distress and needs a comprehensive debt treatment, together with fiscal reforms to restore debt sustainability over the medium term.
“We aim to bring the Zambia program to the IMF Board as soon as possible. However, the precise timing will depend on when the [Zambian] authorities can secure the necessary financing assurances from creditors. This is why we encourage official creditors to come together as quickly as possible to form the official G20 creditor committee under the Common Framework” Holland stated.
Zambia’s Minister of Finance Situmbeko Musokotwane and the hired debt advisors (Lazard) now have the task of ensuring that the credit committee is formed and that Zambia can get refinancing support from the G20 credit committee and the Paris Club in good time before they miss the timeline of getting an IMF deal by June 2022.
It it however not clear how the common debt treatment required to achieve debt restructuring from the key creditors will be achieved as a significant amount of Zambia’s debt is to China and its various financial institutions. It remains to be seen how debt owed to western creditors and that from the Chinese would eventually be treated, without the usual shadow boxing or tag of war between the two.
