Minister of Finance, Dr Musokotwane has clarified that the International Monetary Fund (IMF) deal has not fallen through, as some people have claimed.
Speaking in Parliament, the Finance Minister reiterated the importance of the IMF deal. He explained that since 2016, the country has been grappling with unsustainable debt, and as such this has been experienced through the depreciation of the Kwacha, job losses, an increase in inflation and other issues.
Dr Musokotwane further explained that the country requires assistance from the IMF for two reasons; 1) their assistance will help the government broker deals on debt restructuring and 2) this will help get the country onto an IMF Program, which help the country access concessional funding that is zero rated, and can be paid back across a period of ten years.
Since the elections, however, fuel prices have been somewhat unstable, fluctuating from month to month, and there still remains a looming hike in electricity tariffs. The cost of living has remained high, with the Basic Needs and Nutrition Basket standing at K9,305 for a February, 2022. This reflects an upwards adjustment of prices for basic food items.
However, the economy has recorded small but positive trends in the first few months of this year. According to the Zambia Statistics Agency, there was an improvement in the inflation rate in February, with the country recording 14.2% inflation, from the 15.1% recorded in January. This is comparable to the 22.2% rate that was recorded last February, and 22.1% recorded in September, which was just after elections.
Further to this, the Government has released K3.2 billion towards the payment of both domestic and external debt respectively. The government also released K150 million towards dismantling fuel arrears. The government also collected K6.2 billion from taxes and non-revenue taxes collectively.
While it is taking time for the final agreement with the IMF to materialise, Dr Musokotwane has assured the nation that the deal is still in the pipelines, and shall most likely be effective by the middle of this year. In the meantime, however, he continues to stress the importance of debt sustainability.
“Returning to debt sustainability is important not only to release money for development. It is also important for returning confidence in the economy,” Dr Musokotwane said during his address to the national assembly.
“The path the country has taken to get into an economic program with the IMF is the only credible route to arrest the debt situation is the only credible approach for now that will help to deliver debt relief and a return to normalcy. For this reason, the Zambian Government remains in constant touch with the IMF so that we reach the full board economic program by the middle of this year of 2022.”
We continue to monitor the progress that the government and specifically the Ministry of Finance is making towards ensuring that Zambia has a growing economy, that is self sufficient and healthy.
