ECONOMIST Trevor Hambayi says Zambia is not likely to get on an International Monetary Fund (IMF) economic bailout programme before the August 12 general election as the outstanding issues will need more time to solve.

And Hambayi says the six months that the Zambian government asked for to restructure its debt was not enough, as the country has not gotten any closer to achieving this objective to start meeting its debt payment obligations.

In an interview, Hambayi observed that the Zambian government was not likely to finally clinch that elusive IMF-backed programme due to the limited time remaining.

He added that government would most likely negotiate for a provisional agreement with the Fund, which could only realistically be effected after the August 12 polls.

“With the elections, I don’t think the IMF is going to be able to agree to this. The best that we can hope for is the provisional agreement between the country and the IMF and that provisional agreement is basically saying that, ‘we have agreed to support you, but this is subject to us having to get past the elections…’ I think that is the best one that we can get. And based on this is what they will be able to use to negotiate with bondholders in terms of restructuring the debt, but the actual package is unlikely to come through until after the elections,” Hambayi predicted.

“In essence of the discussions, I do not think that we will be able to get the package. I think government is actually negotiating on a different level rather than the bailout package. It should be on the debt suspension target initiative; we think that is the one that they are trying to look at to try and get the support that we can be able to get out to a point where we can restructure our debt.”

He added that the country’s economic growth will help determine how Zambia would be able to meet its debt obligations.

“So, what we have shown is that we obviously needed a lot longer time than six months to try and restructure our debt depicting the number of components within our debt, which has got the Eurobond, it has the Chinese debt as well as the bilateral debt, which we have as well as multilateral partners who are the IMF. So, all the three needed to come into place for us to be able to restructure the debt, but also another component to our debt restructuring is the position of our economy. We need to be able to tell from our economic perspective the growth that we can attain, and from that growth, we can determine how much we can afford to be able to meet the debt obligation. All these factors need to be put in place before we can actually say that we are in a position to restructure our debt. And despite the six-month (moratorium), which government had initially asked for, we still have not gotten any closer to restructuring the debt and being in a position to actually start meeting our debt payment obligations,” said Hambayi.
The Fund resumed virtual discussions on outstanding issues on Tuesday, March 30, 2021, which will continue into the first two weeks of April.

This follows the previous round of virtual talks that paused on March 3.

According to IMF staff team leader David Robinson, who had issued a statement following the first round of virtual talks, there was a broad agreement on the nature and cause of Zambia’s underlying macroeconomic imbalances.

But he added that discussions on the Zambian government’s request for a Fund-backed Extended Credit Facility were expected to continue following additional work still required on the appropriate policy package.

The key macroeconomic challenge Zambia still faces is attaining debt sustainability, while addressing the country’s huge fiscal deficit.