Washington based lender International Monetary Fund (IMF) projects Zambia’s economic expansion to be less than 2% for 2019. The Dhaneshwar Ghura led team that visited Zambia said in a report that the copper producers macros had deteriorated due to a combination of fiscal and drought effects.
The IMF team deliberated on medium term strategies on how to cure the situation while simultaneously reviewing key elements of the 2020 fiscal budget.
Emphasis was placed on the need for a large, front-loaded and sustained fiscal adjustment that would help set debt on a downward path and reduce domestic arrears. Spending commitments should also be prioritized in order to meet key development priorities including supporting vulnerable populations.
Zambia has been pursuing an IMF program for balance of payment support of $1.3 billion for over 2.5 years which has been a mirage on account of inadequate fiscal discipline demonstration to restore the copper producer on a path to fiscal fitness. Earlier in August, the Finance Minister said he would look to rekindling talks with the IMF for a program. Dr. Bwalya Ng’andu at a post budget cocktail on 28 September said in his speech that he has requested for a resident representative in Zambia following the redeployment of Alfredo Baldini.
Many Analysts have cited the benefits of a program as ranging from improved investor sentiment to boost flows to improved pricing in the international capital markets should Zambia which to refinance its dollar bonds.
The Kwacha Arbitrageur