Minister of Finance Felix Mutati says Zambia’s economy will suffer critical stress under the 2018 budget if government fails to reach a closure with the International Monetary Fund (IMF).
And Mutati today failed to state exactly how much debt Zambia has accumulated so far when members of parliament grilled him.
Responding to a question from Solwezi Central UPND member of parliament Stafford Mulusa who wanted to know how the collapse of IMF negotiations could affect the 2018 budget, Mutati said there were a number of risks that the country needed to take care of.
“Mr Speaker, there are a number of risks that we need to take care of. Amongst them is the risk that budget support that has been programmed for next year is going to be endangered. There is a risk that commitments that have been made by some of our bilateral partners may not be delivered. So that will create critical stress on the economy. It will mean that we shall have to cut from somewhere, it means to secure stability of the economy is going to be challenging. So the risk is real, it is critical and we will have to face it and work hard to do the right thing,” Mutati said.
Mutati also said government was working hard to ensure that debt levels remained stable and that the country only borrowed what it was able to repay.
“Mr Speaker, Cabinet on November 6, 2017, discussed these issues and gave a clear policy direction which include; developing a new financing profile that will ensure the reduction of debt distress from high to moderate on the medium term and to also ensure that debt remains sustainable thereafter. Mr Speaker, our goal as a nation is to ensure that we borrow within our capacity to repay and to refocus expenditure while enhancing domestic resource mobilisation. Of critical importance is to focus on completing ongoing projects. With these measures, government has continued to engage the IMF and as part of the engagement Mr Speaker, we recently had a visit by officials from the IMF and during the visit, the mission met the President Mr Edgar Lungu and her honour the Vice-President madam Inonge Wina,” Mutati said.
Mutati also said having an IMF bailout would help Zambia reduce the negative sentiments of the country’s investment climate.
“Sir, as a member of the IMF, we must utilize a key mandate of the IMF of providing balance of payment to members experiencing balance of employment challenges as the case has been for Zambia. Mr Speaker, having an IMF bailout will reduce the negative sentiments of investing in this country, this is so because many investors mainly rely on the IMF for the assessment of a country’s investment climate. Mr Speaker, let me also assure the nation through this August House that government is resolved to have an IMF supported programme and that the nation will be kept abreast about everything,” he said.
And responding to a question from Roan PF member of parliament, who charged that Mutati failed to clinch a deal with the IMF because he lied about Zambia’s debt, Mutati said he never misled the IMF but did not disclose how much the country was owing.
“Thank you member of parliament for Roan, you may recall that under Article four, the IMF did produce a public statement and in that statement it included the level of debt. The figure that was quoted by the IMF was constant and exactly the same as the figure that we provided. In short, there was no misleading statement,” said Mutati.