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Zambia would have difficulties meeting the International Monetary Fund (IMF) programme conditionalities if further delays in the country’s debt treatment process continued, thereby compromising the agreement.
This is according to the Civil Society Organisation Debt Alliance which has expressed concerns that further delays in the process would also deter Zambia’s path to economic recovery.
CSO Debt Alliance Coordinator, Peter Mumba, expressed concern that the continued protraction of Zambia’s debt treatment process would begin to have adverse implications on the performance of the country’s IMF extended credit facility programme.
Mumba recalled that the entire IMF-extended credit facility programme for Zambia was designed on the premise that the country would have its debt restructured as a requisite to achieving the objectives of the Government’s economic reform agenda whilst helping to restore macroeconomic stability.
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“This could also lead to a vicious cycle of debt and economic instability, which would make it challenging for the Government to meet the conditionalities of the IMF programme.
“Furthermore, with recent volatility in global financial markets, such prolonged negotiations can continue to adversely affect key macroeconomic variables,” he said in a statement on Saturday.
The recently concluded session of the sovereign debt round table meeting was co-chaired by the IMF, World Bank and joined by creditors from the Paris Club and the private sector.
But Mumba was worried that little progress was made during the meeting in terms of achieving its goal of providing solutions to the shortcomings of the G20 Common Framework and establishing cut-off dates for debt treatment among other things.
“The failure to reach an agreement on these issues further prolongs Zambia’s already protracted debt restructuring process. This may have several implications on the success of the IMF extended credit facility programme for Zambia and its economic recovery paths,” he said.
Following from this, the organization has urged government to devise a plan of action that will aid the country in the event the debt treatment negotiations under the Common Framework do not materialise during the expected period.
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