In July, the IMF revealed that talks on Zambia’s economic bailout package, widely expected to be around US $1.3 billion, had been suspended owing to concerns surrounding the country’s debt sustainability.
Speaking during a press briefing from the Fund’s head office in Washington D.C. on July 12, IMF communications director Gerry Rice disclosed that the Fund had suspended discussions on a possible economic bailout programme because the Zambian government’s borrowing plans had compromised the country’s debt sustainability, which in-turn, would undermine Zambia’s macroeconomic stability.
Sources have revealed that since the negotiations for the said bailout package stalled, Zambia started mounting pressure on the multinational lender to withdraw it’s country representative Alfredo Baldini, on claims that he had been acting unprofessional.
Last week, the IMF gave in to the government’s demand to withdraw Baldini, whose tour of duty in Zambia has not yet come to an end.
Economist Chibamba Kanyama, in a tweet which he later withdraw, expressed fear that the IMF may not send a replacement immediately.
“IMF has withdrawn its representative in Zambia, Alfredo Baldini and does not plan to have a replacement any time soon. This happened to Ethiopia and Zimbabwe but under rare circumstances. What message is IMF sending because the resident representative is not here for bailout program only?” twitted Kanyama.
And Kanyama added that Eurobond owners could as well forget about a bailout package from the IMF to Zambia, saying there was no hope left.
“I pity the Eurobond holders who still believe that IMF programme for Zambia is still on. This level of optimism is like that of helpless congregants who still believe their bishop will come back from the morgue,” he stated.
Chief Government Spokesperson Dora Siliya argued that Baldini’s replacement will be in the country soon.
“The IMF is in Zambia for various programmes and is not leaving. However, Mr Alfredo Baldini is leaving Zambia. His replacement will be here soon. [Finance Minister] Honourable Margaret Mwanakatwe will issue a detailed statement over the weekend,” twitted Siliya.
A source told News Diggers that the recall of Baldini may come with consequences.
“It is a fact that IMF has withdrawn its representative Alfredo Baldini earlier than it was supposed to and there will be consequences to that effect. Government itself necessitated the recall and they know it. What they are not saying is that they demanded for the withdrawal of Baldini; they claimed that he was unprofessional” revealed the source.
“I can tell you that Chibamba [Kanyama] was right on this one and his fear should be shared by government as well. It is highly unlikely that IMF is going to send a replacement any time soon. The truth of the matter is that Baldini was forthright with the line ministry and he was bold in pointing out government’s lack of debt sustainability plans and continued borroing which were affecting the balance of payment. This is what was frustrating the government.”
The sources added that the withdrawal of Baldini would further add stress to the Eurobond owners who were hoping for a facility from the IMF.
“This simply aggravate the fears on the international lending market, including the Eurobond owners who were hoping that the IMF would close a bail out deal. This may further affect Zambia’s credit rating and pose doubts among foreign investors. It’s not a good sign for Zambia and there will be several consequences for this,” said the sources.