The International Monetary Fund says discussions with Zambia were put on hold in August after government unveiled large borrowing plans which threatened sustainability.
This is contrary to what Minister of Finance Felix Mutati has been telling Parliament.
At a media briefing in Washington yesterday, IMF director communications department Gerry Rice revealed that discussions with Zambia were halted in August this year.
“Where we are on Zambia is that discussions on a new arrangement were put on hold in August of this year after the authorities unveiled large borrowing plans that we believe threatened that sustainability. So during the Annual Meetings and during a follow-up set of meetings actually led by our Africa Department Director Abebe Selassie, who made a recent visit to Zambia, the authorities expressed their will for a speedy re-engagement with the Fund,” Rice said.
He said the IMF was waiting for the Zambian government to provide greater clarity on credible borrowing plans consistent with debt sustainability.
“Where we stand is that while progress has been made on several elements of a prospective program, the discussions will need to progress and provide greater clarity, including on fiscal policy commitments and credible borrowing plans consistent with debt sustainability,” said Rice.
“So we’re just essentially waiting for further data and details on the government’s external borrowing plans, and then we would field a staff visit to update the macro framework and discuss the way forward.”
But on October 19, Mutati told Parliament that the IMF bailout request had not failed, as negotiations were still ongoing.
“Mr Speaker, let me just borrow a common phrase, and this common phrase is called bailout. And let me just make it clear to this August house that this phrase called the bailout has not failed. The IMF bailout has not failed because our program has not yet been taken to the IMF board, thats number one. Number two Mr Speaker, what was taken to the board is called Article 4 surveillance. This is where the staff from IMF carryout an assessment on the economy on its performance, its financial policies, engage with government, engage with parliamentarians etc,” said Mutati.
“So when we engage with IMF, they said we needed to determine the new path for the debt and in order to determine a new path, we need information and data which we are working together with them (IMF) and they will be back in a few weeks time so that we can have a debt profile that is based on debt sustainability going forward. We can have a debt profile that not only supports growth but also ensures that we do not shock the economy. Once we have done that Mr Speaker, then we will be able to move forward on this particular issue. Mr Speaker, this, we are determined to do because at the end of the dividends for stability and growth, we will accrue to the ordinary person, the ordinary people of Zambia.”