Chibamba Kanyama
ARE WE READY TO PAY THE PRICE WITH OR WITHOUT THE IMF?
After seven years of assurances about an IMF bailout, Zambia is now clearly on course to secure it. This is three and half months after Dr Situmbeko Musokotwane, then in opposition, told me unequivocally he would get the IMF on board within three months of UPND in power.
1. IMF HAS REFORMED: The IMF issue generates emotive discussions anywhere in the world. The old ghost of the disastrous Structural Adjustment Programmes is still fresh for many people. Within the IMF where I worked, these realities are compounded by the failed prescription during the Asian crisis (1997/98). I have, however, written before that there are significant adjustments in IMF approaches in programme arrangements in recent years: broadened consultations with stakeholders including with civil society, protection of the vulnerable during the programme execution through wider social cash transfer arrangements and allowing the recipient country to negotiate the terms (conditionalities). Serbia, Ghana and a few countries are the documented success stories of countries that recently weaned off a three year IMF programme, with renewed economic stability though there still remains some doubts. These countries would be valuable lessons for Zambia about how to do it (Serbia) and how not to do it (Ghana).
2. PEOPLE SOULD UNDERSTAND AND ACCEPT THE OPTION: Of importance now is to get Zambians fully prepared for what is coming. They should know why we have gone into this arrangement, what guarantees exist that we will restore the economy to desired levels after the programme period (healthy fiscal account; increased domestic and foreign investments; high employment levels); and why this remains the best option under the circumstances. It is possible Zambians may come up with other options to demonstrate their resolve to do away with the IMF or any other ‘imperialistic’ solutions. Some of the possible solutions they may propose include an increase in PAYE, VAT and corporate taxes (citizens who mean real business go for this option!). This can help us pay off the debts in about five years and we can be a truly free country economically.
3: THE PROBLEM IS REAL: We should explain to the people that with or without the IMF, we need to sort out the problem before us, the problem of unsustainable debts to the extent that to survive in 2022, we still have to borrow to pay off older debts. You may never know: Zambians, including the trade unions, can decide against the IMF by choosing to bite the bullet beyond an increase in taxes. They can choose to voluntarily remove all manner of subsidies so that those savings can be used to bail out the country. These are real and practical options at this time, and most of them can be worse than IMF conditionalities.
4: CHOOSING THE ACCEPTABLE PAIN: The bottomline is that with or without the IMF programme, Zambians will pay the price, especially those with limited economic leverages. It is now a choice of what kind of pain is endurable: either the IMF programme that helps us to restructure the debts by offering us nearly zero interest Ioan but with conditionalities or a home grown programme that will call for more or less the same austerity measures but at least through self-injection. The previous regime tried the latter through Zambia Plus but lacked willpower to inject ourselves. We can also choose to postpone the problem by avoiding to pay the debts, an option that destroys our sovereign standing now and in future.
5. IMF PROGRAMME IS MANAGABLE: Zambians are generally in a better state to endure the IMF conditionalities than was the case in the 1990s. Government is equally more knowledgeable about what to do now than it did in 1990s. Some of the reforms IMF usually pushes for such as liberalizing the exchange rate are no longer an issue. The IMF is also much more prepared to handle our requirements than before and will definitely seek to protect the poor against becoming poorer during the course of the programme.
5: SUMMING IT ALL: We have a problem before us. We postponed making critical decisions at the right time. Now someone has to finally call the shots. Government has come up with one option and it’s a question of whether we accept it or not. If we reject it, we have to come up with another REALISTIC option. It is not enough to simply react against imperialists and think the problem will go away; let us show them what we are made of. It’s a reality check and may God grant us wisdom (‘Look to the LORD and His strength; seek His face always. Ps 105:4). Have a lovely Sunday.