Zambia to dictate terms over IMF loan-Mutati

GOVERNMENT will determine the conditions of the International Monetary Fund (IMF) economic recovery programme once it has been agreed upon and finalised and will engage external partners in assisting with the process, Finance Minister Felix Mutati has said. Mr Mutati said Government was determined to embark on emergency measures to start addressing the economic imbalances through a home-grown economic recovery programme.  He said this when he delivered a statement on the state of the economy to Parliament yesterday and where he outlined the economic recovery programme to be supported by the IMF. “This is the reason we are referring to our Economic Recovery Programme as “Zambia Plus”, meaning that all solutions will be determined by us Zambians while external partners will form the ‘plus’ as we engage them to assist in this Zambian process. This includes the IMF,” Mr Mutati said. Mr Mutati said the economic recovery programme would provide Zambian solutions to the challenges, including domestic ones, such as policy reversals and the impact of growing expenditure pressures that had affected monetary policy. He explained that the monetary policy would not have been tight if the fiscal policy had been less expansionary. “Sir, with this economic recovery programme, Government has taken responsibility for the hard work and decisions that lay ahead. The Economic Recovery Programme provides Zambian solutions to the challenges we face. We will reach out for support, but any support will be limited to assisting us, in our processes and our policies for economic recovery,” he said. The minister said the focus of the recovery programme would be on moving from imbalances to unlock faster growth and provide the employment opportunities to a more sustainable footing. He however revealed that Government had not yet hosted any detailed programme discussions with the IMF and that there were no IMF preconditions. “Whilst some of the shocks we have faced are externally induced and so cannot be controlled, there are areas where more consistent policymaking can play a key role. These imbalances clearly need to be urgently addressed. “The economic challenges we are facing are also reflected in the deterioration of public finances. In 2016, the fiscal impact of the economic shocks has forced public expenditure upwards while revenues fell short of expectations. This has caused the gap between what taxes we collect and what we must spend to drift further,” he said.  Mr Mutati also said foreign reserves had substantially declined from US$3.9 billion in July 2015 to US$2.3 billion at present due to a trade deficit caused by more imports and less exports. “The much-needed foreign exchange is flowing out of the country. This is as a result of existing commitments we have, particularly those relating to subsidies that have an external component,” he said.