Economy

IMF Hints At Tough Times Ahead For Zambia’s Economic Recovery

imf-zambia-reportsThe International Monetary Fund has wound up its Zambian mission providing a brutally honest status assessment of the economic situation as the country warms up a recovery package.

During the IMF team visit they have met with government and other stakeholders on the feasibility of being given the US$1.5 million loan.

A lot of anxiety has spread with social commentators fearing the IMF program could spell tighter times.

The IMF mission will return to Zambia in early 2017 to conduct Article IV consultation and program discussions.

BELOW IS THE FULL IMF STATEMENT:

Press Release No.

FOR IMMEDIATE RELEASE

November 1, 2016

IMF Staff Concludes Visit to Zambia

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.

“At the invitation of the authorities, an International Monetary Fund (IMF) team led by Tsidi Tsikata visited Zambia during October 19-31 to help assess the current economic situation and provide policy advice to restore macroeconomic stability and promote broad-based economic growth.

At the end of the mission, Mr. Tsikata issued the following statement:

“The Zambian economy continues to be under stress from the impact of external and domestic shocks and an unbalanced policy mix. The pace of economic activity remains sluggish in 2016, with growth projected at 3percent due to continued electricity shortages, low exports and subdued private sector consumption and investment.

“Public finances are severely strained. Fiscal performance through the first three quarters of 2016 was characterized by shortfalls in revenue and substantial spending overruns on fuel and electricity subsidies. The government has also been accumulating payment arrears to suppliers and contractors. The stock of arrears is projected to increase from about ZMW10 billion (5 percent of GDP) at end-2015 to about ZMW 20 billion (9 percent of GDP) at the end of 2016. On a cash basis, the fiscal deficit for the whole year is projected to reach 5 percent of GDP, and the deficit on a commitment basis (i.e., taking into account the net accumulation of arrears during the year) at about 10 percent of GDP. To date, the cash deficit has been largely financed with domestic borrowing, mainly from the Bank of Zambia.

“Monetary policy has continued to carry the burden of policy adjustments. A tightening of monetary policy helped stabilize the exchange rate and put inflation on a downward trajectory. However, the ensuing tight liquidity conditions together with the slowdown in International Monetary Fund

Washington, D.C. 20431 USA growth and the accumulation of government payments arrears have put the private sector and the banking system under stress and led to an increase in non-performing loans.

“The mission and the authorities discussed a broad range of measures to create fiscal space for beginning to clear government’s arrears, scale up social spending and reduce the fiscal deficit on a commitment basis in 2017. This adjustment would help to put public debt on a downward path and allow monetary policy to gradually unwind the current tight stance, allowing the economy to recover.

“Zambia’s current economic challenges can be overcome with resolute policy action such as the recent adjustment of fuel prices to cost-reflective levels and the announced intention to reduce electricity subsidies.

These measures, if coupled with structural reforms to reduce inefficiencies and increase capacity utilization in the energy sector, would go a long way toward increasing Zambia’s potential growth.

The mission welcomes the authorities’ plan to scale up social cash transfers and protect social spending, including on health and education, to mitigate the potential impact on the poor.

“The mission welcomes the authorities’ decision to undertake a broad-based consultative process to ensure support within the government and across national stakeholders for their policies and reforms that could be implemented under an IMF arrangement. At the authorities’ request, the mission will return to Zambia in early 2017 to conduct Article IV consultation and program discussions.

“The team met with Finance Minister Felix Mutati, Bank of Zambia (BoZ) Governor Denny Kalyalya, National Development Planning Minister Lucky Mulusa, other senior government and BoZ officials, members of parliament, as well as representatives of the private sector, labor unions, civil society organizations, and Zambia’s development partners. The mission thanks the authorities and the other stakeholders who it met with, for their openness and the constructive spirit in which all discussions were held. The IMF stands ready to support Zambia and its people as needed.”

40 Comments

  1. BENNY MWENDA

    WE ARE IN DANGEON PEOPLE OF ZAMBIA.TULAMANA NZALA IPUDO,WAGE FREEZE.

    • Reason

      Sometimes it is good to say nothing if you have nothing to say

    • Eye

      Bunny, we will not die. we could have died if the powers that be were refusing that we need some interventions of some kind. we shall only die if it does not rain, or if it rains and we sow or plant nothing. we are farmers before we become business men. Stay positive

      • Bemba Bimbo

        A widespread famine affected Ethiopia from 1983 to 1985. The worst famine to hit the country in a century, in northern Ethiopia it led to more than 400,000 deaths, but more than half this mortality can be attributed to human rights abuses that caused the famine to come earlier, strike harder, and extend further than would otherwise have been the case. Other areas of Ethiopia experienced famine for similar reasons, resulting in tens of thousands of additional deaths.

        The famine of 1983–85 is often ascribed to drought. While climatic causes and consequences certainly played a part in the tragedy, it has been suggested that widespread drought occurred only some months after the famine was under way. The famines that struck Ethiopia between 1961 and 1985, and in particular the one of 1983–85, were in large part created by government policies.

        https://en.wikipedia.org/wiki/1983%E2%80%931985_famine_in_Ethiopia

        WE CAN DIE! With a corrupt and useless Lungu and his PF thieves, WE CAN DIE!

    • Eye

      Sorry Benny I misspelled your name.

  2. David Bwalya

    I am in support of IMF policy advice, but I would like to know when these stressful conditions will end.

  3. Eye

    we shall not die of hunger. it’s simple logic. these are observations and they need attention. and the first step to.recovery is to accept where we are and each one of us to do his or her part. I am positive that we shall emergy stronger and prosperous.

  4. wheels

    l do not know why we should be dealing with IMF when we had all the money in the reserves to see us avoid being slaves of the IMF may chagwa can do some dununa to turn our situation for the better although HH would equally fixed it

    • young sheikh 181

      what else?

    • Arthur

      Your point is very good. We had money and we had the opportunity to make more thru windfall tax but we missed the opportunity. We need to plan better and not spend money we cannot afford to spend carelessly

  5. Native

    Quote “The IMF stands ready to support the people of zambia” unquote. Very diplomatically said but are the people of zambia ready to help themselves by holding the “elected” authorities accountable for all the monies they’ve borrowed? No financial institution worth its salt disburses money to a loan applicant without setting conditions. No blank cheque will be issued to zambia given the background that only about a decade ago her debt was forgiven by the same multilateral institution among other lenders and that it is the current PF that has ruined zambia’s economy in the last five years. How trustworthy is this bunch of politicians in office today? Will the IMF casually put good money after bad that easily?

  6. village politician

    borrowing is good when u use the money in good use

  7. zambian dollar

    Euro bond given 2 zambia railways,where did it go? I cant see any improvment in zambia railways,and u want 2 borrow again and fill your pokets alone,first explain how u used our money-Euro Bond,more especially in zambia railways ltd

  8. Dericks Petsa

    If u have nothing to comment its bether u remain silent no one will laugh at u, than just mentioning an invalid creature HH, what can hh do,

    • VM

      What the IMF is saying today,HH has been preaching for the last few years.So he actually saw all this coming.But alas we shall dance to the IMF.Indeed one may ask,what exactly did we do with the euro bond money apart from the roads?

      • Native

        Over and above the eurobonds PF went and borrowed more monies bilaterally to supposedly do the same “roads” at inflated cost.

  9. Sun-chib's

    Why borrow when you don’t have the capacity to pay back. And ask yourself a question, why someone who know you are incapable to pay back lend you? Then between lines…..

  10. Sun-chib's

    Think between lines

  11. Zambian Citizen

    Well said @Native.

    • Kenny

      My advise is directed to ZRA Commissioner General Mr Chanda to be more proactive on some foreign owned companies as well,most of them are in the hubbit of evading the much needed TAX for this country and the people who are contributing most to this are officers from ZRA intrusted by the Government to do the inspections are so selfish. When ever they go to one of the companies to inspect their books officers are usually complomised more especially those sailing used vehicles from Japan and other countries.I want to employ even the ACC,DEC and other wings to be so involved in fighting this bad vase money is transferred to their countries at the expense of Zambia’s development hence weakening the kwacha.

  12. Kalampa 4 Lyf

    Zambia will always be at the beck and call of these Lucifer Trust group of companies because of reckless expenditure by government officials and ministers.For how long can we continue in this financial slaverly whilst PF officials enjoy themselves at the expense of ordinary Zambians?

  13. think tank

    Zambia..a country blessed with almost all the natural resources but lacking one major resource..HUMAN RESOURCE instead we have very useless pipo presiding over our affairs, how can you have a dancing Queen for a president and expect to develop?? Just buy a genset or solar inveter en play your song by jk

  14. think tank

    Next time vote with your heads not your hearts…on any scale HH is better than chapona..most pipo voted for chapona becoz of the hatred the harbor for HH & if u investigate y, becoz he’s tonga..how dull can some pipo be? PLEASE fellow country men use your head. Some dull pf cadres r even ready to eat shit as long it’s from lungus toilet

  15. Mapolo ya mbuzi

    Bafikala mukoseh there z no money in reserves at central bank

  16. PHILIPIANS NYENDWA

    Development lies on unity,pu tting together the idears not just insulting each other,those oppositions who are wise and they have seen that zambian economy has gone down they stil can development to there strong holds provinces even on other provinces,,,i also have opportunity to address it i wish i could meet or atleast Mr mutati,my i dear can contribute to develop our country economy….0964462837;;;

  17. PHILIPIANS NYENDWA

    Development lies on unity,pu tting together the idears not just insulting each other,those oppositions who are wise and they have seen that zambian economy has gone down they stil can development to there strong holds provinces even on other provinces,,,i also have an idears now i hav no opportunity to address it i wish i could meet or atleast Mr mutati,my i dear can contribute to develop our country economy….0964462837;;;

  18. Figure it for yourself

    Every civilized citizen knows the acts of politicians so don’t be smart upnd caders, even your so called hh would have been in the same situation. Talking too much will not benefit u dear just work hard and feed your family.

  19. Figure itout for yoursoelf

    Every civilized citizen knows the acts of politicians so don’t be smart upnd caders, even your so called hh would have been in the same situation. Talking too much will not benefit u dear just work hard and feed your family.

    • Daesh

      Iwe Chikala there were indicators that the economy was falling but you kept on stealing until it collapsed.

  20. andrew daka

    Comment few positive coments so far……

  21. Dennis

    Ala

  22. Daesh

    Stealing and stealing until the economy collapses. Dogs

  23. dontMINDme

    uwafitala akaimwena….

  24. AARON GANZOLES

    People of zambia the only solution is hard work.

  25. gmn

    IMF is a monister, why did they invite them.

  26. gmn

    IMF is a monister, why did they invite them. If they can not fix the economy let them resign

  27. mr hills

    these pfools shud realise dat there pres has no method to fix the economy.we are headed 4 the worst

  28. man on the million

    We consider ourselves as chritians here in zambia but our duolls are totaly different becouse of our bad being we have destroyd our own country mwebantu ifyakubilimina filocha pliz imf adviz this current gvt to surender zambia to pipo who can handle it with patient or we give it back to the whites

  29. moses

    Things are falling apart in Zambia why

  30. mr d

    dependency syndrome

Comments are closed.