Reform Needed To Tackle Debt - IMF

The International Monetary Fund (IMF) has provided further detail on the reasons why Zambia is yet to conclude an agreement with the organization, more than five years on from when talks originally started.

According to IMF Spokesman Gerry Rice one of the key challenges in making progress was the question of how to implement the necessary reforms. Dr Rice said there was a broad consensus between the fund and the government, and that the government knows what it has to do to move things forward.

“That said, key challenges remain including to implement reforms to correct current large fiscal imbalances, increasing revenues to provide the needed fiscal space to achieve those development objectives that I mentioned including through debt and expenditure transparency and halting the incurrence of domestic arrears,” Dr Rice explained.

He also emphasized the importance of ensuring the social protection scheme is fully funded with timely payments.

“The timing as to when those measures are taken is, as always, in the hands of the authorities, in the hands of the Zambian government,” Dr Rice continued.

The latest set of talks between the fund and the government once again failed to deliver an agreement earlier this month, making a deal before the 2021 elections increasingly unlikely.

Talks have been ongoing for more than five years, with the government rejecting an initial proposal in 2015, before later returning to the negotiating table.

The major stumbling block concerns Zambia’s debt sustainability, with the IMF warning in 2018 that discussions could only progress once the government implemented credible measures to manage the country’s growing debt burden.

Since then, Zambia’s debt has ballooned under the PF government, topping out at over $20 billion this year. In 2020 Zambia was one of the few African countries not to receive financial relief for the coronavirus pandemic because of its unstable debt situation, as well as a poor relationship with the PF regime.