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Zambia’s delay to get IMF bailout will hurt economy – ChikwandaBy Natasha Sakala on 25 Jun 2019
Government must immediately bring the International Monetary Fund (IMF) on board because any further delay will negatively affect Zambia’s economic resilience, says Former Finance Minister Alexander Chikwanda.
In an article titled “Patriotism (Love And Duty To The Country) Is An Inescapable And Compelling Moral Imperative For All Citizens”, Chikwanda expressed worry over Zambia’s declining international gross reserves, which had plummeted to about US $1.46 billion by February, 2019, from US $1.56 billion by the end of last year, representing 1.7 months of import cover compared to 1.8 months of import cover, respectively.
He stated that all responsible citizens should urge the government to take the “tough medicine” of getting on an IMF economic bailout programme for balance of payments support and to reinvigorate Zambia’s stressed economy.
“I have in the past noted that the IMF is now less theological. The institution cannot depart from the ingrained habit of coming with a pre-ordained script from Washington, D.C. With pain, I admit that the IMF’s concerns about borrowings are plausible. The decline in our reserves is rather worrying so let us all responsible citizens urge our government to take the tough medicine – delay could affect the economy’s resilience,” Chikwanda cautioned.
“A programme with the IMF gets a diversity of investors on board. This is the ugly reality of our lop-sided world.”
He called on government to engage in more private-public partnerships to avoid excessive borrowing.
“A major problem the country has is to sustain expenditure on constitutional and statutory requirements, namely emoluments and public debt, which account for more than 80 per cent of the national budget. There are no easy solutions. We cannot reduce the size of the civil service without risks for service delivery and accentuating unemployment. However, government should take the plunge and decelerate the annual wages salary adjustments,” Chikwanda noted.
“As debt servicing becomes increasingly unsustainable, it is inevitable that except for concessionary facilities from multi-lateral institutions, such as the World Bank, African Development Bank, etc, the other types of borrowing be frozen, which leaves scope to finance viable infrastructure through Public–Private Partnerships (PPP).”
Government and the IMF have continued engaging, with the last IMF staff team, led by Mary Goodman, who visited Zambia during April 16-30, 2019, to conduct the 2019 Article IV consultation as part of an ongoing process to help the country continue implementing a strong fiscal consolidation agenda.
However, the Fund’s concerns over the Zambian government’s excessive borrowing, combined with its huge domestic arrears, have left a desired, much-needed, economic bailout package expected to be around US $1.3 billion to boost Zambia’s balance of payments, in serious doubt.
And Chikwanda insisted that the opposition should not be misled into thinking they can bring down President Edgar Lungu because he still commanded a lot of respect in the ruling party.
“A more credible opposition would have undressed the many flaws in the constitution because governance does impinge positively or negatively in the direction or impact of development. The present electoral system entails that parliamentary and Presidential candidates have to marshal large amounts of financial resources to dish out to the voters or leaders of opinion and influence. Isn’t this the genesis and recipe for corruption?” he asked.
“The opposition parties and the free (cum opposition) media which in a way try to check the excesses of government misdirect their efforts by concentrating on the Republican and Patriotic Front leader, Mr Edgar Lungu, with a misperception that they can bring him down. Mr. Lungu’s approval ratings in the PF is high and PF feel that the inroads the party is making in provinces where the party’s showing was weak in the past is essentially on account of those provinces’ perception of Mr Lungu’s affability, humility and a spirit of fellowship. The ingrained diehard segments in opposition should also realise that it is not easy to wish away the numerous development projects going on throughout the country, which has not been the case in the past.”
Meanwhile, Chikwanda urged President Lungu to leave a unique legacy by restructuring governance arrangements to have a non-executive president.
“When there was a change-over to multi-party politics after a number of us confidants of president Kaunda persuaded him not to proceed with a costly referendum, but amend an appropriate section of the Constitution to reinstitute multi-partism, all that happened was to craft multi-party politics onto the flawed one-party constitution. The implicit risks of the “privatisation” of the State were not addressed,” Chikwanda recalled.
“The Patriotic Front and President Lungu should not miss this rare opportunity of making history by leaving a unique legacy for Zambia and again being a trendsetter for a continent that totally lacks innovation in the important human sphere of governance. Restructuring governance arrangements to have a non-executive President would be a historical landmark. It would take a lot of heat out of our future politics. The cost savings would be astronomical because support institutions would be drastically reduced. This practical and meaningful ‘dis-privatisation’ of the State would be a laudable decision and would set Zambia apart as a continental role model.”
He further advised government to consider other electoral options, such as Proportional Representation where the losing opposition party leaders got to sit in Parliament as long as their parties met minimum thresholds.
“Other veritable electoral options, such as Proportional Representation, merit consideration. With the system of lists, by-elections and their exceedingly excessive costs are avoided. The voters are asked to endorse the ideas and programmes of parties. Those leaders who are consigned to lose in Presidential elections will sit in Parliament as long as their parties meet the minimum thresholds. Proportional Representation also has fairer and more equitable representation and no personal-to-holder turfs,” argued Chikwanda.Related ItemsHeadlines
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