The International Monetary Fund has again failed to approve an economic recovery programme for Zambia. The Zambian government has been hoping to sign an economic recovery programme with the IMF since December 2015.
It was hoped that the programme would come with a bailout package of around US$1.3 billion.
This week, Ministry of Finance Permanent Secretary Mukuli Chikuba announced that Zambia was hopeful that progress towards an economic bail would be attained during this week’s IMF/World Bank Annual meetings in Washington D.C.
However, the IMF in a statement on the 2017 Article IV consultation released on Tuesday has made no fresh commitment to entering into an economic recovery programme with Zambia.
And IMF’s Resident Representative in Zambia Mr Alfredo Baldini said in a statement that no agreement has been reached on an IMF supported program for Zambia.
“The discussions on a possible program were put on hold in August, and IMF staff proceeded to prepare a report on the 2017 Article IV consultation with Zambia which was discussed by the Executive Board on October 6,” Mr Baldini said.
Mr Baldini said the IMF staff will be meeting the Zambian delegation at the IMF-World Bank Annual Meetings to discuss next steps.
“No substantive program discussions will be held at the Annual Meetings,” he said.
And in its 2017 Article IV consultation statement, the IMF said Zambia’s public debt has been rising at an unsustainable pace and has crowded out lending to the private sector and increased the vulnerability of the economy.
The Fund said the outstanding public and publicly guaranteed debt rose sharply from 36 percent of GDP at end-2014 to 60 percent at end-2016, driven largely by external borrowing and the impact of exchange rate depreciation.
The IMF Directors expressed concern at the pace at which public debt, especially external debt, has increased and now put Zambia at high risk of debt distress.
However, they commended the progress made in developing a medium-term debt strategy.
The IMF says it is critical to slow down on the contraction of new debt, especially non-concessional loans, strengthen debt management capacity, and improve project appraisal and selection processes.