IMF Concludes Virtual Mission

The International Monetary Fund (IMF) has concluded its virtual mission to Zambia.

The team led by Dhaneshwar Ghura participated in a number of virtual meetings between June 22–July 10 to discuss the Government’s request for emergency support under the Rapid Credit Facility. These included meetings with Finance Minister Bwalya Ng’andu, Bank of Zambia Governor Denny Kalyalya and various senior officials, as well as the private sector.

Among the topics up for discussion were the authorities’ response to the COVID-19 pandemic, recent economic developments, the economic outlook and policies for 2020 and the medium-term. 

Commenting on the visit Mr. Ghura stated, “The social and macroeconomic impact of the COVID-19 shock, on top of a severe drought last year, will be heavy. Growth is forecast at around ‑5 percent in 2020, substantially lower than envisaged at the beginning of the year, and the number of people living in extreme poverty is expected to increase. Fiscal pressures in 2020 have increased due to significantly lower revenue collections and higher spending needs. Zambia has requested support under the G20 Debt Service Standstill Initiative, which would provide temporary fiscal space this year.”

“Discussions covered both near- and medium-term policies to address these challenges and the underlying macroeconomic vulnerabilities, including the main elements of the revised 2020 Budget with a focus on spending for the COVID-19 health, social and economic response. Discussions will continue as the authorities determine their policies and priorities in the formulation of the revised 2020 Budget, as well as the medium-term fiscal stance needed to restore debt sustainability, revive growth and lower poverty,” Mr. Ghura explained.

Relations with the IMF have proved troubled under President Lungu’s government. A bailout had been under discussion, on and off, for more than five years, with the Government rejecting an initial proposal in 2015, before returning to the negotiating table. The President then challenged the IMF to leave the country if they felt he had gone beyond the norms of good governance and democracy following the declaration of a state of emergency in 2017. The fund subsequently withdrew its representative to Zambia in August 2018. One of the major stumbling blocks to a deal appears to be concerns regarding Zambia’s debt sustainability.