Zambia Seeks more loans from the IMF
Amb. Emmanuel Mwamba wrote;
Dr. Situmbeko Musokotwane Can only run the Country based on accumulating more debt and shielding the Mining Sector from Paying Fair and Equitable Tax
Hon.Ngandu Peter Magande achieved a successful debt restructuring under the HIPC Debt Restructuring Program, that by 2008, Zambia’s foreign debt was written off from $7billion to $500,000.00.
Further Magande introduced windfall tax for the mines and in 2008, ZRA obtained $600 million tax revenue from the mines, the biggest amount in 20 years.
President Levy Mwanawasa sadly passed on in 2008. There was a leadership succession tussle. Magande had put himself forward as a presidential candidate of the MMD.
So when Republican Vice President Rupiah Banda was elected as MMD President and President of the country, he fired Magande and appointed former State House Special Assistant for Economy, Dr. Situmbeko Musokotwane as new Minister of Finance.
Musokotwane immediately abandoned the lucrative windfall tax claiming that such a policy stifled mining investment but began to accumulate new foreign debt, especially under Chinese Project Finance.
As at 2012, Zambia’s foreign debt had risen from 500,000, to $2.8billion.
Similarly when a decade later Musokotwane returned at the helm as Minister of Finance, he immediately abolished the Mineral Royalty tax which was non-deductible to deductible again, claiming that such a tax stifled foreign investment to the mining sector.
He further gave new tax incentives to the mines.
The tax was earning the Zambia Revenue Authority about $1billion a year in tax revenue in 2019, 2020 and 2021. The revenue from the sector dropped to about $300million.
Further, the country has accumulated more new foreign debt with the debt jumping from $11.9billion to $14.2billon.
He has also borrowed heavily from the domestic market.
Now he SEEKS to increase the IMF Bail-out loan from $1.3billion to $1.7billion.
Below is the story.
Zambia asks for IMF loan to be increased to $1.7 billion
LUSAKA, June 4 (Reuters) – The International Monetary Fund (IMF) said on Tuesday that Zambia’s government had asked for its $1.3 billion loan programme to be increased to $1.7 billion to help it respond to a severe drought.
The IMF also said in a statement that it had reached a staff-level agreement on the third review of the southern African country’s Extended Credit Facility.
Once the latest review is approved by IMF’s executive board at a meeting expected by the end of June, Zambia will have access to roughly $573 million, the fourth disbursement under the facility.