MWAISA BANGA? NAISA NEKA: EXPLAINING THE IMF EXTENDED CREDIT FACILITY TO AMBASSADOR EMMANUEL MWAMBA
By Alexander Nkosi (Naisa Neka)
Good afternoon Ambassador Emmanuel Mwamba. You asked the Minister of Finance to explain how Zambia used funds accessed under the IMF Extended Credit Facility (ECF). This article addresses your question in detail.
Let me begin by providing an economic situation analysis for 2021 when the New Dawn Government came into power. At the end of 2021 Zambia’s total debt and interest arrears stood at K634 billion (USD31.74 billion) against domestic revenue of K66 billion. Hence, total debt was almost ten times bigger than domestic revenue. Total debt was higher than GDP which was USD22.1 billion in 2021.
In 2022 out of domestic revenue of K98.9 billion, about K120 billion was allocated to debt service and civil service wage bill. Simply put, domestic revenue was not enough to meet just two items on the budget. Zambia remained heavily dependent on copper for both domestic revenue and foreign currency earnings. In 2020, due to collapse in copper proces and drop in foreign currency earnings Zambia ended up defaulting on debt service.
Zambia clearly needed debt restructuring and deep economic reforms. During this period of debt restructuring and deep economic reforms it was imperative to esnure that Zambia:
1. Found a cheaper source of foreign currency (dollars) to supplement foreign exchange earnings to meet imports and foreign currency denominated obligations such as debt service;
2. Maintained health foreign exchange reserves to cushion the country in an event it faced a crisis which affected foreign exchange earnings;
3. Cushioned the poor through increased funding to social security programs;
4. Ensured that social services like education, health and water and sanitation were not adversely affected.
When Zambia started implemented the IMF program, it was granted an opportunity to access concessional loans under the extended credit facility to address the four issues listed above. This facility was not meant for procuring fire tenders and building airports.
Now that I have explained how funds accessed under the IMF extended credit facility were used, my next article will address program and project loans: why has Government continued contracting program and project loans? Are these new loans? What exactly is happening and where is this money going?
Thank you,
Naisa Neka
CC:
Sean E. Tembo
Hon Binwell Chansa Mpundu
Dr Fred M’membe
Excellent rebuttal Alexander Nkosi. This is as it should be, responses to the misinformation from these quacks.
Short and concise, but propagandists won’t be satisfied, unfortunately
The question being asked is why borrow $184 Million and meanwhile allow $3.5 Billion to be lost through Shoddy deals?
Is the $1.5 Billion from IMF a cheaper source of Foreign Exchange as compared to raising the same through Mining .
Activities such as Gold and Suglite exports , and from the Traditional Mining Activities surely can raise the $1.5 Billion.
Does it mean that governments can’t have there own Home grown policies outside the confines of the IMF?
If what Alexander Nxosi presents is the reasoning of the Zambian Government, am more receptive to the opinions of Dr Fred Mmembe and Ambassador Emmanuel Mwamba.
On debt restructuring, the President lost a lot of time by sidelining the major Bilateral Lender , China, preferring to instead take a much longer route through western countries. The President lost a valuable 2 years, 60 foreign Trips chasing Shadows. it was only through the Pressure from people like Dr Fred Mmembe and others that he , finally sat down, stopped his globe trotting , and decided to finally undertake the only critical Trip to China, which he should have taken much earlier..and things started moving.
Alexander Nxosi’s article doesn’t do much to explain the rationale of some of the economic policies the government is pursuing.
After wasting 2 years looking for a selfie with Joe Biden and being cosy to the West, our President now finds himself with Donald Trump..And all the Investment he made in Joe Biden and others have come to zero. The Lobito corridor is still a song.
The irony of it is that the President and his economic team are still going to the IMF for more Loans!
What is the reason for this mwe bantu.?