Zambia upbeat about IMF deal
By Jeff Kapembwa
LUSAKA – Despite current political tension following the arrest of opposition leaders earlier this month, Zambia is optimistic that it will secure over $1 billion in aid package from the International Monetary Fund (IMF).
The leader of the United Party for National Development (UPND) Hakainde Hichilema is behind bars, facing an array of charges including treason. Hichilema was arrested early in April.
The arrest has been roundly condemned both inside and outside the copper rich Southern African nation.
Some critics have described the action to arrest and detain Hakainde as “an affront to democracy and the rule of law”, which the government has brushed aside.
Some renowned statesmen including former Nigerian leader Olusaguni Obasanjo, former Kenya Prime Minister Raila Odinga, the European Union, United States and other interest groups have raised their voices over Hichilema’s detention.
But President Edgar Lungu’s government remains upbeat about the deal to secure $1,5 billion from the international lender, the money it needed to restructure the economy.
“At the moment we know that we can get up to $1,6 billion, if you ask me, I’d go for the maximum,” says Finance Minister Felix Mutati, who is in Washington DC for the annual World Bank and IMF Spring meetings at which he is expected to finalise the agreement for Zambia to secure the loan, it urgently needs to revitalise the limping economy.
While many political commentators, may have probably feared Zambia’s investor confidence was under threat following recent political disturbances, authorities argue that the country’s reputation was intact and if anything, investment for Zambia as the favoured destination remains on top of the agenda for most of the existing or potential investors.
“Investors getting worried over the political climate? Not at all. We, if the deal falls through, then it will not be because of the ongoing problems in the country because as government we are committed to ensuring that there is peace and order while at the same time protecting property and lives of its citizens,” Amos Chanda, the spokesperson for the Presidency said in an interview in Lusaka last week.
“We are optimistic that we will secure not less than US$1.2 billion because we envisage redressing many concerns affecting various sectors,” he said.
On what could happen if Zambia fell out of favour from clinching the much sought after aid package from the donors during the spring meeting, Chanda said, “so be it and Zambia could look at various other options to ensure the programme is not disrupted.
“In an event that it (governance) became an issue, well, we’ll not lose sleep over it.
“We will walk away and look at other options of refinancing our programmes and say, well, the sovereignty of the country demands that we enforce law and order.”
But the Presidency says Zambia’s case with the IMF’s financial bailout was well prepared and the delegation in Washington, led by Mutati, was well aware of the urgent needs for Zambia to redress all financial concerns and realign the economy.
“Our case is water tight and we are sure we’ll break through the ice and as far as we are concerned, this issue (funding) is different from politics, and we are basing our hope on the home growth programme dubbed Zambia Plus” which has no IMF conditionalities.
Zambia has been talking about getting IMF aid since 2014, but resisted after two presidential elections.
The country’s fiscal deficit has risen threefold, foreign-exchange reserves have declined lamentably to less than $2,5 billion-representing less than three months of import cover while the economic growth is near the lowest since 1998, spurring the need for a programme with the fund.
Zambia’s debt has also been climbing, putting pressure on the Treasury. External debt has increased to $6,9 billion, said Mutati, who President Lungu appointed finance minister in September last year. According to analysts, the debt portfolio has more than doubled since 2012.
Total government debt is about $10 billion, which Mutati described as “pretty high,” and needs to be resolved to create fiscal space for economic expansion.