By Amb. Emmanuel Mwamba
YES, IMF GAVE US CONDITIONS-NOEL NKHOMA
Economist and former UPND Luangeni Parliamentary Candidate, Noel Nkhoma has admitted that the International Monetary Fund (IMF) gave the New Dawn Government conditionalities to access the much needed loan and begin to achieve debt sustainability.
Nkhoma said Government cannot be careless with spending and effecting of subsidies, three months away from approval of the programme.
In December 2022, the IMF team reached a Staff-Level Agreement with the Zambian authorities on an arrangement under the Extended Credit Facility (ECF) for 2022-2025.
The expected large, upfront fiscal adjustment is a shift in spending, away from what the IMF call “inefficient public investment and poorly targeted subsidies”.
To this effect, Government committed to removing; direct and indirect subsidies on fuel, electricity and Farmer-Input Supply Programme (FISP).
Since then Government has failed to remove indirect subsidies on fuel (waiver of taxes on petroleum products remains).
On electricity, ZESCO had attempted to increase the price of connection and meter separation fees from minimum of K700 to K7,700.
However ERB advised that the application by ZESCO to revise connection and meter separation charges by 213 percent and electricity tarrifs were both deferred, pending an in-depth cost-of-service study and further consultations.
Government was also expected to reform the FISP programme so that it reduces spending from 2.8% of GDP to 1% of GDP.
The staff-level agreement remains in the pipeline until the IMF Management and Executive Board approve it and receive the necessary financing assurances by June 30th, 2022
If approved, the IMF will disburse Special Drawing Rights of $1.4billion in a period of three years.