Zambia’s external debt sustainable, Lungu tells IMF
By Staff Reporter
PRESIDENT Edgar Lungu today claimed before a visiting delegation from the International Monetary Fund that his government currently grappling to borrow US$1.6 billion from the Washington-domiciled institution is serious about debt sustainability.
Zambia’s external debt is currently at US$7.2 billion and economists say the country has been borrowing recklessly to finance projects that were generally over-priced and expensive due to endemic corruption in government.
Amidst concerns that Lungu’s PF administration is riddled with theft of public funds, as well as increased public outcry over the government’s controversial purchase of 42 second-hand fire-tenders at US$42 million, Lungu pleaded with the Dr Abebe Selassie-led IMF Africa Region delegation to conclude the economic recovery programme negotiations.
The plea and assurance was made at State House in Lusaka when Dr Selassie, the IMF director for the African Region, paid a courtesy call on Lungu who has nonetheless challenged all those alleging that his administration was brazenly corrupt to produce evidence.
“Although we remain committed to continue on the path of economic reform and stabilisation, there is need to bring the programme negotiations to a conclusion. We are committed to move forward with the programme,” Lungu said. “We are taking painful decisions now, to ensure we make progress in the economy and secure the livelihoods of our people.”
Lungu said in ensuring debt sustainability and fiscal discipline whilst maintaining a healthy balance between social spending and growth programmes, his government had systematically instituted an unprecedented electricity tariff increase of 75 per cent within the same year based on cost reflective levels.
Prominent among those that were in the company of Lungu during the courtesy call was finance minister Felix Mutati, who last month claimed that the 2018 national budget had sufficiently addressed sticking points noted by the IMF’s executive board relating to Zambia’s economic outlook.
And Dr Selassie was accompanied to State House by Dr Boileau Loko, the newly-appointed IMF Zambia Mission chief, IMF executive director for Zambia Dr Maxwell Mukwelazamba as well as the IMF resident representative for Zambia, Dr Alfredo Baldini.
In a recent IMF report on Zambia’s economic outlook, the country’s economy was said to be in near-crisis from the fourth quarter of 2015 through 2016 and this was attributed to rising public debt which was progressing at an unsustainable pace thereby rendering the economy vulnerable.
Delivering a statement in Parliament on the state of the economy and economic recovery programme to be supported by the IMF in March this year, Mutati described Zambia’s economic situation as grave and that the statement he was delivering was a guide to ensure the country shifts back “to levels of growth our country needs to prosper”.
“The economic challenges we are facing are also reflected in the deterioration of public finances. In 2016 the fiscal impact of the economic shocks has forced public expenditure upwards while revenues fell short of expectations,” said Mutati then. “Whilst some of the shocks we have faced are externally induced and so cannot be controlled, there are areas where more consistent policymaking can play a role. These imbalances clearly need to be urgently addressed.”
Below are the five pillars of Zambia’s IMF-supported Economic Recovery Programme dubbed ‘Zambia Plus’:
- To strengthen tax policy and administration, to improve revenue inflows, and to shift public expenditure back to affordable levels.
- To ensure the poor are better protected, the government will see an increased budgetary allocation to social protection including addressing the plight of pensioners.
- Safeguard Zambia’s resources and prevent wastage by strengthening regulations and laws to make them more punitive to abusers and ensure transparency in economic and spending decisions.
- Improve budget credibility, better planning and adherence to expenditure plans and improvement of quality of government spending.
- Provide greater economic stability which comes with a better platform for economic growth and job creation.
Source: www.parliament.gov.zm
