IMF HAS GIVEN US PERMISSION TO EMPLOY 41,000 WORKERS-MUSOKOTWANE
FINANCE minister Situmbeko Musokotwane says IMF is in agreement that this year government hires 11,200 health workers and 30,000 teachers.
He says this is so because the modern economy is premised less on the natural resources but brain power of its citizens.
Following Dr Musokotwane’s ministerial statement on progress in discussions with the International Monetary Fund and on the country’s debt restructuring initiative yesterday, Chama North PF member of parliament Yotam Mtayachalo sought clarity on whether the Fund was agreed to the recruitment of staff in the health and education sectors.
“Madam Speaker, I’m alive to the fact that Zambia owes colossal sums of money – multilateral, bilateral and also commercial debt. I want to find out from the minister, that since the new dawn government is in the process of employing 30,000 teachers and 11,200 health workers and other ministries are about to do the same,” said Mtayachalo.
“What is the position of the IMF? Have you agreed, has the IMF agreed for this government to employ those workers taking into account that 50 per cent of our income actually goes to personal emoluments? Has the IMF agreed for the new dawn government to employ those workers within this year?”
In response, Dr Musokotwane said the Fund was agreed.
“The answer to your question is yes. The IMF are in agreement that this year we hire 11,200 health workers and 30,000 teachers. Madam Speaker, the modern economy, the modern economy, is premised less on the natural resources that we have. And moreso on the brain power of citizens of the country. We have seen this in places like Japan, countries like Taiwan, countries like Malaysia, they have no minerals. The country like Hong Kong even to build an airport, they had to import sand because there’s no space. There is no land. They had to import sand from Indonesia to go and pour into the ocean to create land for the airport,” explained Dr Musokotwane.
“So it is the brain power and therefore it follows that unless Zambia trains her youth, gives health to our young people, then the future of the economy of this country is in great jeopardy. So yes, Honourable Mtayachalo, there is absolutely no problem with that. It is all agreed, sealed up. The money is ready by colleagues who are about to recruit.”
Earlier, Dr Musokotwane said Zambia has been struggling with unsustainable debt since about 2016.
He said the manifestation of the problem has been through continuous loss in the value of the kwacha, rising inflation, loss of jobs and many other problems.
He said on realising that the debt was crippling the economy, Zambia approached the IMF to seek assistance out of the quagmire.
“IMF assistance is required for two reasons. Firstly, the IMF alongside other international bodies can help to broker a deal between the Zambian government and the creditors or those that the government owes. In such a deal, creditors will be persuaded to restructure Zambia’s debt. The desired outcome after the restructuring should be such that the debt that remains is serviceable. This then will enable the country to return to the group of respected countries which borrow, pay back and be able to borrow again if necessary because lenders will trust her,” Dr Musokotwane explained.
“Secondly, the intervention from the IMF will enable the country to get onto an IMF programme. That IMF programme will make it possible for Zambia to access long term concessional funding as she moves forwards. The funds will be concessional because the terms include interest rate at zero, grace period of five and half years and 10 years to pay. In essence therefore, the Zambia will access cheap money at a time when she needs money most.”
He said Zambia and IMF have agreed on the need to attain fiscal and debt sustainability and also on the need to invest in human and economic development to ensure recovery and long-term growth, especially for Zambia’s most vulnerable sections of society.
Dr Musokotwane said the Staff-Level Agreement had also paved the way for debt restructuring talks with creditors.
He said the debt restructuring would be implemented while upholding the principle of comparability of treatment across creditors.
“Zambia’s creditors will therefore be treated fairly under the auspices of the Common Framework for debt treatment beyond the debt service suspension initiative,” he said.
Dr Musokotwane said in the aftermath of the completion of the Debt Sustainability Analysis, the next important milestone is the formation of the Official Creditor Committee.
“The committee is composed of Zambia’s bilateral creditors. The bilateral creditors will analyse Zambia’s debt situation as illustrated in the IMF’s Debt Sustainability Analysis. The bilateral creditors will then provide indications of the debt relief that they would be willing to provide to Zambia and indicate that comparability of treatment which will be expected from commercial creditors,” he said. “Commercial creditors, though not participants in the Official Creditor Committee, will be invited to provide comparable relief to Zambia to ensure fair burden-sharing.”
He anticipated that the official creditor committee would be formed within the next few weeks paving the way for the commencement of the restructuring discussions. Dr Musokotwane said the discussions with the official creditor committee are expected to culminate in providing financing assurances to the IMF executive board to enable the approval of a US $1.4 billion extended credit facility (ECF) for Zambia.
“…the resolution of Zambia’s crippling debt situation is paramount to reviving the economy. We can’t expect a strong economy as long as the debt situation is not brought back under control. The path the country has taken to get into an economic programme 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,” said Dr Musokotwane.
“For this reason, the Zambian government remains in constant touch with the IMF so that we reach the full board economic programme by the middle of this year of 2022. In this regard, Madam Speaker, the Zambian government is firmly on track to ensure that what we have planned regarding debt relief and attainment of the IMF program becomes a reality without fail.”