ZAMBIANS should not be too expectant of the International Monetary Fund’s (IMF) appointment of Preya Sharma as the country’s new resident representative because her office does not carry much authority, says economist Chibamba Kanyama.
The IMF recently named Sharma as its new representative to Zambia last week two years after her predecessor, Dr Alfredo Baldini, was hounded out by government after he was considered as persona non-grata back in 2018.
Commenting on the much-awaited appointment, however, Kanyama observed that the office of the IMF country representative did not carry much authority as to sway the Fund’s position on Zambia and its enormous debt and fiscal challenges.
Zambia’s sovereign debt position is widely recognised as being unsustainable, with a huge fiscal deficit, missed debt interest repayments and a default projected on the horizon, all considered as major factors delaying the much-needed economic bailout package.
“The appointment of Preya Sharma as the Resident Representative (ResRep) of the International Monetary Fund to Zambia may signal the Fund’s increasing interest in the debt challenge facing the country. Since Alfredo Baldini was unceremoniously recalled in July, 2018, bondholders have been extremely anxious and this has not been helped by a couple of changes at the Mission Chief-level responsible for Zambia within the same time period at the IMF Headquarters in Washington DC,” Chibamba said in an interview.
“Even if the appointment should be good news for government, investors and the IMF itself, we should, for now, not be over expectant about the impact the appointment will have over Zambia’s debt situation. While a ResRep is crucial at a time like this one, the office does not carry that match authority as to tilt overnight the IMF position on Zambia and its debt. The ResRep has very specific responsibilities and understanding them would be the best way of managing the IMF and its executive board.”
He said it was vital for government to provide assurance of trust and mutual respect as it tried to negotiate with the Fund for the elusive bailout deal.
“It is, therefore, important for government to maintain an open door policy and fully utilise the services of the ResRep through closed-door meetings to guide on government engagement with the Fund. Baldini has since been re-assigned, implying that as far as the IMF is concerned, he focused on the IMF mandate and it’s important that as the new person comes, government should provide assurance of trust and mutual respect. To ensure that relations with the IMF are on higher ground and benchmarked on this trust, it’s important for government to further accept that the ResRep will, from time to time, engage the wider public, including other political players, Civil Society Organisations (CSOs), trade unions, academia and students,” he added.
“It is a requirement by the Fund that these stakeholders be engaged on any matters of economic policy. Notwithstanding, the IMF has a refined diplomatic approach in engaging authorities and will always comply with clear instructions from their shareholder. I only advise that as Sharma takes office, there will be closed-door meetings so that both parties are clear of their expectations.”
And he outlined that Sharma would ensure that the Fund’s work would be sustained through continuous engagement with local authorities.
“The Responsibilities include (1) maintaining a constructive dialogue with the Zambian authorities and providing technical advice on issues as they evolve; (2) reporting to headquarters on all relevant developments and policies in the country on a timely, regular and systematic basis; (3) in case of a programme, assisting Fund missions in programme negotiations and reviews, as well as in Article IV Consultation discussions, including in the preparation of papers; (4) helping advance analytical work on key issues facing the country; (5) liaising with the World Bank and other multilateral and bilateral organisations providing financial and technical assistance to the country, and representing the Fund in related meetings,” said Kanyama.
“Six, providing logistical support to and participate in country team missions, as well as facilitating requests of technical assistance missions from headquarters and the AFRITACs; and (7) conducting effective public relations work with Civil Society Organizations and the media. It is, therefore, very important to know how the IMF works and what the role of the Resident Representative is. The individual is the eyes and ears of the IMF in the country and will not do or say anything that has not been authorised by the Fund.”
Sharma’s appointment, a special assistant to the director of the lender’s Africa Department, comes after the Zambian government asked Dr Baldini to leave back in 2018, a move that marked a low point in Zambia’s relations with the IMF.
Sharma has not yet relocated to Lusaka due to travel disruptions amid the Coronavirus pandemic.
Prior to joining the IMF in 2012, she was the head of emerging markets at the UK Treasury.
Zambia had sought a loan from the Fund since 2016, but failed because of concerns over its excessive borrowing and unsustainable debt levels.
The country is still in hot pursuit of a deal with the IMF for new financing under an economic programme, which the country’s creditors see as a crucial step to restructure its US $12 billion external debt.