THE International Monetary Fund (IMF) says Zambia faces difficult policy choices to respond to the COVID-19 pandemic as the country requires additional interventions in the health sector while trying to restore debt sustainability.
And the IMF says its country office in Lusaka remains open and operational, even though a decision has still not been made to replace Dr Afredo Baldini, the former resident representative, who was recalled at the instigation of the Zambian government.
Meanwhile, the IMF says Zambia does not qualify for the recently released “Revamped Catastrophe Relief Trust Fund that the institution granted to 25 poor countries.
The IMF was responding to a News Diggers! press query sent to African Department director Abebe Aemro Selassie.
“Like all countries in the world, the Zambian authorities are facing difficult policy choices. Responding to the COVID-19 pandemic requires additional interventions in the health sector and also to support the parts of the population, whose livelihood is being affected by the economic spillovers from the pandemic. At the same time, fiscal revenues are under pressure as the economy slows,” Communications Officer Louis stated in an emailed response on behalf of the IMF.
“The most recent Article IV Consultation, which was concluded by the IMF Executive Board in July, 2019, contained our assessment of the policy challenges facing Zambia and policy options going forward to achieve debt sustainability over the medium-term. The Zambian authorities are aware that steps would need to be taken to restore debt sustainability. In this regard, as per Minister [Dr Bwalya] Ng’andu’s Ministerial Statement of February, the IMF staff takes note of the government’s commitment to restore debt sustainability through fiscal policy adjustment and debt management.”
And when asked why Zambia was not considered for immediate debt service relief to grated to 25 countries under the Catastrophe Containment and Relief Trust, the IMF stated that Zambia did not qualify.
“The recent announcements on debt relief to countries from the Catastrophe Containment window of the IMF’s Catastrophe Containment and Relief Trust refers to relief of debt service due to the IMF by the 29 poorest countries in the world. Only countries with per capita income below the IDA cutoff threshold of US$1,175 (US $2,350 for small states) were eligible for this relief. Since Zambia’s per capita income at US $1,430 in 2018 is above the IDA cutoff, it does not qualify for such relief from the IMF,” the IMF explained.
When asked if the Fund considered extending its COVID-19 aid to other countries not considered on the initial recipients, the IMF responded in the affirmative.
“CCRT has US $500 million – we aim to increase it to $1.4 billion, which would cover debt service to the IMF for up to two years for 29 countries,” she stated.
Meanwhile, the IMF explained that it would announce Dr Baldini’s replacement at an appropriate time.
“The IMF Resident Representative Office in Lusaka remains open. An announcement would be made at the appropriate time on a successor IMF Resident Representative to Lusaka,” stated Meeta.