Zambia’s Minister of Finance, Dr. Situmbeko Musokotwane see’s widened likelihood of a financing deal with the Washington based lender, the International Monetary Fund (IMF) after an array of engagements with key stakeholders on the sidelines of the IMF/World Bank Spring meetings that ran from 18 – 24 April, 2022. Speaking during a media briefing in Lusaka the capital, Musokotwane said the Zambian delegation he led courted IMF Managing Director Kristalina Georgeiva, World Bank President David Malpas, the Paris Club Secretariat, Sovereign Rating Agencies, the United Kingdom Minister for Africa, US treasury officials and bondholders. These players did render their commitment to support the Southern African nations commitment towards restoring fiscal fitness.
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Musokotwane revealed that engagement with World Bank hinged on expenditure rationalization and efforts to rekindle growth while in return the Bank affirmed its support to the copper producer through financial and technical assistance. Zambia has continued to roll out reforms with the latest being the Private Public Partnership that will see greater dialogue between the two faculties of its economy.
Zambia’s debt restructure process is currently in the labyrinth of a Debt Sustainability Analysis (DSA) on the basis of financing assistance from the IMF while simultaneous engagements with creditors continues under the common G20 framework well ahead of the June board presentation. The red metal producer currently grapples with fiscal fragilities exacerbated by an acute pandemic that made it the first nation to default on its dollar bonds in COVID era. Zambia in December 2021 formally applied for an IMF financing package whose delay was on the back of clarity around the countries debt exposure but over the last 9 months has seen significant strides supported by a stronger political will in the wake of a new regime. Leadership in the Southern African nation has maximized the use of foreign policy for economic diplomatic purposes, steps that have seen a greater push towards actualizing trade, greater engagement with creditors with the Head of State and lifting of subsidies as Zambia reorganizes its fiscal purse to maximize economic growth possibilities.
Some key positive externalities that an IMF deal brings include a World Bank $564 million under the International Development Association (IDA19) for which $275 million will be allocated towards budget support, $189 million towards growth initiatives and the remainder would be allocated towards capacity building, Musokotwane highlighted in his presentation. And under the IDA20 (after June 2022) Zambia has further latitude for a $654 million which in part would be used to maximize social safety nets towards cushioning poverty.
The two Bretton Wood institutions have committed to expediting their internal processes to align to Zambia’s June 2022 target to seal an IMF deal. However consistency in reforms towards budget implementation and restriction of commercial borrowing, Musokotwane revealed.
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