As some of you may be aware, the International Monetary Fund (IMF) team has been in the country to conduct their routine visit to Zambia. They have had meetings with the Minister of Finance, Bank of Zambia Governor and Members of Parliament.
I attended one of these key meetings on your behalf. I would be accurate to say the Government of Zambia has in the 3 years made it clear that they would want to be placed on an IMF bail out programme.
So, why are we not on an IMF programme? Is the Government and the IMF putting up a deal together? Was the IMF team in Zambia to finalise the deal? When will the USD 1.3 billion be wired from the IMF headquarters in Washingtone DC to the Bank of Zambia in order to ease the pressure on the Zambian Kwacha and stabilise our economy?
Well, from the IMF perspective, discussions on a possible bail out plan were actually abandoned in 2017 and they were only in Zambia to benchmark our economic policies and profile our risk levels for the next 12 months.
Traditionally, IMF delegations are always very diplomatic and are selective of what information they give out. What was made clear though was that a bail out deal was no longer under discussion because the two parties could not reach a compromise on a set of policies especially those that would ensure Government borrowing is curtailed.
On the issues of debt, the IMF lamented on how the PF Government switched from the use of concessional loans which are basically soft loans with generous terms to full market loans.
My take is that concessional loan deals usually take longer to obtain but the PF Government wanted quick bucks and went straight into Euro bonds on market terms and once these loans where obtained what exactly were they used for?
Countries borrow to pump funds into strategic sectors to stimulate economic activities and growth. Consequently, a bigger tax base would have been created to support the repayment of the debt.
This has never happened with the PF Government borrowings and that has been the concern of the IMF. Instead what we have seen is this Government using foreign currency reserves at Bank of Zambia to service debt. Reserves that the PF Government never built up at all but were actually stocked up by Governments before them.
I further agree with the IMF’s view that the Zambian Government failed to create a balance of economic expenditure of the said loans. Government’s position of expensive infrastructure development with inflated contracts is unjustifiable.
Road development has been done before in this Country. The late President Levy Patrick Mwanawasa (MHSRIP) did it but without collapsing the economy. His Government still paid civil servants on time including all workers in parastatals.
On the other hand,the PF administration want us to accept that their developmental agenda or the lack of it can only be achieved by first collapsing the economy, starving civil servants, failure to deliver fertilizer to peasant farmers in Kapiri Mposhi and by devaluing the Kwacha which they found strong and bullish.
We all need to tighten our seat belts because the PF rollacoaster ride is only starting.