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Substantial progress has been made by Zambia’s official creditors, following a meeting they recently held to decide on the country’s fate towards debt relief.
The International Monetary Fund (IMF) is, therefore, hopeful that Zambia’s official creditors would in the next few weeks finalise the details needed for the debt relief deal.
Zambia needs financial assurances from its creditor to access the US$188 million second distribution from IMF.
The IMF, through its resident Representative, Preya Sharma, said on Friday at a Public Lecture in Lusaka, that the fund needed to see progress in terms of the debt restructuring talks that Zambia was having with its official creditors.
The public lecture was organised by the University of Zambia (Department of Economics), the IMF (Zambia Office) and ECA (Sub-regional Office for Southern Africa) under the theme: “Addressing the Financial Squeeze for Achieving Sustainable Development Goals (SDGs) in Zambia.”
Read more: Zambia seeks IMF flexibility in quest for $188 million facility, as negotiations with creditors drag
“What that needs in terms of the programme moving forward before we can go to the IMF board with the request for the next disbursement, we also need to see progress in terms of the debt restructuring talks that Zambia is having with its official creditors.
“I am aware of the meeting yesterday [Thursday] and there was substantial progress towards a debt deal and we hope that those details will be finalised in the coming week or so and that will also help us going forward so again we see things move in the right direction on that front,” Sharma said.
And in her presentation on the “Big Funding Squeeze,” Sharma said fiscal policy was needed to reduce debt vulnerabilities in the Sub Saharan Africa (SSA).
She emphasised that need for fiscal adjustment to Stabilise Public debt below 70 percent of the Gross Domestic Product (GDP) through reducing off-budget commitments (extra-budgetary spending, arrears, guarantees, etc), enhancing debt management and increasing domestic revenue mobilisation, among others.
She also encouraged Central Banks to continue tightening policy rate (gradually) until inflation was firmly on a downward path.
“But not complacent. Inflation is a life-or-death issue for many and is much more costly to tackle once second-round effects become entrenched. Pegged countries. Face lower inflation but have the added constraint of maintaining adequate reserves,” Sharma said.
Reacting to her presentation, UNZA Lecturer-Department of Economics,!Obrian Ndhlovu, said the IMF should play a role of a navigator by alerting countries on what lied ahead should they take certain measures.
“The report gave a good picture of where Africa and its challenges but then IMF is more like a navigate showing you the way because it should spend more time showing us into the future and raise red flags that the path you are taking..these are the calamities that are there ahead.
“What seemed was in the situation we are in, how we are in debt, how we are unable to fund our social sectors because we are spending more money to services debt,” Ndhlovu said.
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