By Ernest Chanda
FINANCE minister Situmbeko Musokotwane
says money the new dawn government is borrowing from the World Bank conforms to the country’s economic recovery programme.
And secretary to the treasury Felix Nkulukusa said the government had already revealed IMF conditions through the national budget presented to parliament last December.
Addressing journalists on the outcome of the Spring Meetings he attended recently with the International Monetary Fund, World Bank and other cooperating partners, Dr Musokotwane assured that the country is under the right economic recovery programme.
He highlighted support received from the Bretton Woods institutions, the Chinese executive director at IMF and other creditors.
“The World Bank did commit to provide more financial resources to Zambia. The kind of borrowing that is taking place now is in conformity with debt sustainability. But more importantly, as we do these reforms, as Zambia struggles to get out of the debt crisis, you need financing. You need financing because as we cut the jacket that is available, we want to make sure that in so doing we do not put excessive pressure on co-social sector areas in particular,” he told journalists at Lusaka’s Mulungushi International Conference Centre yesterday. “We need to hire teachers; we need to build classrooms. We need to build health facilities, hire medical staff. But then you want to do these things at a time when you’ve no money. You’re indebted. So, there will be a lot of pressure on the poor of the poorest. To avoid that, as we restructure everything else about the economy it is necessary to get the so-called concessional financing from the Bretton Woods institutions – the World Bank. The interest rate is roughly about 0.5 per cent and it’s paid over a long period of time; sometimes as long as 30 years. So, it makes economic sense to get this cheap and long-term money as you sort out other issues of the economy. We are assured of magnificent support to Zambia’s economic recovery programme from both the World Bank and the International Monetary Fund (IMF).”
Dr Musokotwane said the Zambian delegation had “very fruitful meetings at world level culminating in the meeting that we had with the World Bank president himself. There was lots of support for the economic reform agenda that Zambia is pursuing”.
“Lots of support in terms of the reform. That is reform in revenues, expenditure operationalisation, and of course our emphasis on the point that going forward we are going to focus on seeing to it that the economy of Zambia begins to grow away from the negative growths or near-zero growths of the past few years,” said Dr Musokotwane.
And responding to a question on what conditionalities Zambia had agreed with the IMF during a staff level meeting, Nkulukusa noticed that the message had not been understood so far.
He said the economic reform agenda presented by the government when it just came into power detailed some of the reforms to be undertaken.
“So, it is the Zambian macro-economic framework that we have presented to the IMF. This framework is encumbered by the debt overhaul. And we came up with the debt sustainability analysis that says in order for us to have this framework, we think that our debt treatment should be reprofiled so that we can have that macro-economic framework,” he explained. “Three things that we committed in there that could come out. One, the minister committed that we are going to undertake expenditure in the social sector. Recruitment of 30,000 teachers, recruitment of 11,000 health workers. If we don’t do that and we use that money for something else, the IMF are going to tell us, ‘sorry, the macro-economic framework you told us was that you’re going to recruit teachers so that you invest in human capital and therefore we’ll not give you a programme.’ If we did that.’’
Nkulukusa explained other commitments government made to the IMF.
“We also committed that we are going to remove the subsidies on fuel. And that over the long term we are going to look at the cost-of-service study on electricity and that we are going to migrate to that cost-of-service study. So, those are the issues that the minister and the IMF mission chief talked about in January after we went onto that programme. There’s no secret beyond those issues that the minister announced in the budget,” said Nkulukusa.