President Edgar Lungu has asked the International Monetary Fund to offer an emergency bail out to his government but only start implementing the needed austerity measures after the August elections.
President Lungu through Finance Minister Alexander Chikwanda made the plea when he met an IMF mission team that was in Zambia over the last two weeks.
The IMF is however not willing to offer emergency financing to the Zambian government before the country’s authorities submit a detailed technical report on how it will stabilise the economy.
This led to a deadlock and the much expected deal was not agreed at the end of the mission.
Impeccable sources who attended part of the consultations with the IMF team revealed that President Lungu was begging the IMF to relax its terms and allow his government to start implementing key austerity measures after August.
The sources said President Lungu contended that implementing a full set of austerity before the August elections will make it impossible for him to secure re-election.
Among the key measures the IMF team is demanding that government implements includes the removal of fuel subsidies, a serious reform of the Farmer Support Programme, introduces cost reflective power tariffs and a slowdown in infrastructure spending.
And in an End-of-Mission statement released on Friday, the IMF said the Zambian government indicated that strong near-term measures are being evaluated and that, at the IMF/World Bank Spring Meetings in mid-April, they would provide further guidance on the policy direction and reforms, and their plans for an IMF-supported program.
“Government finances are under immense stress. Expenditure is running far above budget, in large part as a result of fuel subsidies and contracted emergency electricity imports that together are estimated to cost the treasury about US$660 million a year at the current pace (equivalent to 3.2 percent of GDP). At the same time, domestic and external financing options have become more limited along with rising interest rates. Mounting domestic arrears are adding to concerns about debt sustainability,” the IMF said.
It added, ““tightening of monetary policy has been effective in stabilizing the exchange rate but tight liquidity conditions have contributed to persistent under-subscription of treasury bills and bonds. However, there is little scope to loosen monetary policy as long as fiscal imbalances are not addressed. A key challenge going forward will be to normalize activity in the interbank foreign exchange market while avoiding a return of last year’s extreme volatility in the exchange rate.”
The IMF said its mission and the Zambian government reached a shared understanding of the challenges and risks associated with the current economic situation.
“The authorities stressed that, notwithstanding the upcoming general elections, they are committed to addressing the budgetary pressures, including moving to cost-reflective energy pricing, and scaling back on discretionary spending while safeguarding social protection programs. They indicated that strong near-term measures are being evaluated and that, at the IMF/World Bank Spring Meetings in mid-April, they would provide further guidance on the policy direction and reforms, and their plans for an IMF-supported program,” it said.
“The mission is confident that Zambia’s current economic challenges can be overcome with resolute policy action, allowing a resumption of growth in line with the country’s abundant potential. In particular, a package of measures that makes clear that the fiscal pressures are being tackled would boost market confidence and pave the way for increased investment and growth. However, delays in implementing corrective measures will only worsen the situation, increase the adjustment cost and postpone the recovery.”
Lungu, terms and conditions apply,
This Son of a Bast.tard destroyed this country in Kaunda’s time and Zambians have let him again. Smelly bum and mouth mongreal. When does this country learn. Its so upsetting.
It was too recent when we got pulled out of the same gutter; and not too long ago PF justified every move to borrow more. But who is now playing to the music?
They are still borrowing as announced in every cabinet meeting…
Crap article without any iota of truth in it. This is kind of crap Zambian watch dog writes. This is nonsense ba LT.
HH and some of us raised red flags on pf borrowing to appease voters,and pf bloggers called us names ati we are are losers and bitter.so lungu wants to pretend that he is fixing the economy and he wants us to give him a five year mandate.for lusakatimes to publish this that means the situation is worse than it is reported here.
Meanwhile according to one of the many PF certified comedians, Frank Bwalya, the UPND President HH has bought all the mealie meal, fuel and electricity from ZESCO to cause artificial shortage and embarrass our visionless republican president Edgar Lungu
HH & Nawakwi need put campaign aside, they need meet IMF before Zambians starved by PF.
Here it is! Lungu, Chikwanda and company want to LIE to Zambians until after the elections, and then when the TRUTH about their corrupt and incompetent leadership is exposed it will be TOO LATE to kick these swines out for another five years!
While the FOSSIL DINOSAUR is negotiating to try and save Zambia from the same shiit as Argentina and Greece that he put us in ONCE BEFORE, Lungu is busy taking another holiday in Mozambique!!!
We must not only KICK THESE DULL DUNDERHEADS OUT in August, we must hold them PERSONALLY RESPONSIBLE for the destruction of mother Zambias economy and PUNISH them accordingly!
NO SERIOUS POLITICIAN WOULD AGREE TO SUCH TERMS IN THE YEAR OF ELECTIONS. NOT EVEN AN AMERICAN POLITICIAN WOULD [THE SO CALLED OWNERS OF DEMOCRACY]
@TED, Americans NEVER have to deal with such conditions or outsource the management of their economy to the IMF. No need to speculate what they may or may not agree to.
You can not cure an alcoholic by giving him a job in a Liquoer Store…the mindset of these empty tin is irreversible hence they are unable to tighten the purse..its an utter waste of time!!
@ Cat Power and Dokotor same archaic UNIP policies revisited by the very same Chikwanda!
Imwe ba mambala, read the article! The greatest drag on the financial imbalance of Zambia is the FUEL and ENERGY (electricity subsidies), the two things UPND and their HH raised so much stink about when PF/Edgar tried to do something about. That’s what even the IMF is worried about! HH being such a self-proclaimed economist should have been the first to support EDGAR/PF when they tried to do exactly what the IMF is talking about—SUBSIDIES! SO WHAT IN H3LL ARE YOU UPND SYCOPHANTS YELLING ABOUT? Your bloody small “god” (HH) and your Party are in full support of these ridiculous subsidies!Just like the way HH is up in arms blinding supporting the nonsense going on at UNZA and CBU instead of supporting the Govt in their decision to terminate meal allowances—a very big and unnecessary…
continue…
…expense to the treasury! These things cost money, and one expects people who call themselves ECONOMISTS to support Govt when they try to do the right thing instead of choosing political expediency.
@yambayamba Poor planning by PF is what caused the energy crisis, now we have to import power. On fuel subsidies, i thought Sata got rid of them before…..? See now, lies are catching up. Number dont lie.
@ Cat Power l feel you my man! Especially those of us who enjoyed free education (including LPW, RB, EL, HH) and those who were given an opportunity but didn’t take it – FTJ (he used to run away through the window)! MCS (he just couldn’t count or spell)!
Chagwa should just start dancing at the airport when these guys are arriving at KKIA, it will excite them, & CAUSE THEM TO GIVE US THE FUNDING!! Everyone in PamaFi loves to see Chagwa “hitting the floor” with his chikokoshi moves!!
#Chagwamustfall!! #Chagwaisfalling!!#chagwa anagwa kale anso!!
Jamieson, they boys from IMF don’t want you messing with their expensive drinks – you should stick to chibuku mixed with mayeau bambo!!
Vote wisely 11/8/2016!! Vote UPND!!
I thank you!!
Comment:#ChagwaMustFall
@olson,fuMancu and Dokoter the only suitable punishment is to get all there grand daughters and parade them in front of the S.E.X starved PF animals they have created that beating people every day and let them watch
saulosi these are the discussions from the IMF meeting and their words check on reuters and see for yourself. why are you upset? this is the problem when you want to be emotional about ECL when all the evidence is pointing at how screwed the country is. now let’s hear you blame the global world environment again….
WE WANT CHANGE! WE WANT CHANGE! WE WANT CHANGE! LUNGU KUYABEEBELE. LUNGU WE KICK YOU OUT OF STAE HOUSE THIS AUGUST. ENOUGH WITH YOUR LOOT. YOU HAVE CHOCKED ALL OF US BECAUSE OF YOUR LACK OF VISION TO RUN OUR GREAT NATION. YOUR LEADERSHIP IS TOO MEDIOCRE TO RISE AGAINST THE CHALLENGES OF OUR COUNTRY. CHANGE, HERE WE COME. VIVA UPND VIVA! VIVA HH VIVA!
PF No Economic Recovery Plan(ERP), they thought increasing the debt cealing from 60% to 160% will help them. IMF has made a good decision over this, it is not just borrowing borrowing, but why borrow. Mr Chikwanda was even annoyed when passing the bill in parley………….
It’s nit a tit for rat you know @Observer, people in Zambia will suffer badly and the delay fir these reports will only worsen things. Maybe you live abroad and having it easy but we can’t fail to feel sympathy for our fellow human and our people. IMF is just politicking, because frankly they were releasing reports to us saying the gob’ was borrowing responsibly, backing Chikwanda. It’s what they do, breaking African nations. Lungu has only been in power barely a year, blaming him is plain unfair.
Tit foe tat!! Rat!
But what kind of leader is this whose only preoccupation is to secure re-election. This is the second time in less than 6 months that this President has told the IMF that implementing their reforms will cost him the August Election. Had he accepted the first offer most of the suffering now would have been averted. Do the Zambian people who Mr Lungu expects to re-elect him really matter to him or only our votes are important?
To rephrase what Lungu is trying to say:
“Dear IMF, give me the money now with a grace period of up to August so that I can win elections under false pretences. After August, I will screw Zambians with austerity measures, including 400% electricity tariffs, since I will have a mandate of another 5 years.”
#ChagwaMustFall
This is what happens when you have deceptive and corrupt leaders who thrive on cheating people and always kicking the can down the road. And guess what? Reality is catching up with them. Sad that Zambia is so rich but so poor because of poor leadership.
What could we have expected with those diplomats saying they have a larger voice in IMF because of their larger contributions.
Austerity measures being introduced now would not effect President Lungu’s popularity. President Lungu is reluctant to make the people suffer more with effects of drought very prevalent. The gov’t was right to ask for any cuts to be implemented after elections, because of danger people will riot if things bite more than they are now. It’s incredible to ask for the measures to curb developments which are underway. Fuel subsidies taken away would have impact on small businesses.
So who exactly would you blame for the current quagmire we find ourselves in after achieving middle income status under Mwanawasa? The opposition? Do you never get a headache defending !diocy? President Lungu does not give a hoot about the people which is why he is only asking for a grace period and not a re-negotiation of the IMF terms my dear deluded PF cadre. He is more than ready to apply the austerity measures and the only thing he is worried about is the TIMING. Objectivity once in a while will not kill you. Use your brain.
UPND should notify all lenders to wait until after elections if PF want to borrow some more money or none of the depts against the country will hounered.
@Spaka you need to put a hold on this type of talk. You people want riots and chaos in Zambia! Why can’ t you just win elections like everyone else.
Patriot,
Zambia can not live on loans. This has to end. PF get loans for everything then spend them on long term projects while Zambia goes further into the gutter. With agriculture products now in big demand regionally, the should have boosted irrigation and Zambia would have been a winner, we should have been feeding Congo, a rich big hungry country. But instead PF has been concentrating on comboni roads.
@Spaka Zambia needed to repair those pot holes! Where would the water to irrigate agri products have come from with all the water tables have dried out in failed rains?
We have lived with pot holes for decades, another 2-3 yrs would not make a difference. The current situation is like a farmer with a leaking roof that is destroying his machinery, but instead of investing in quick cash crops to deal with the roof. He invests in crops that will mature in 10 yrs.
For agriculture, That is why you build channels, pipe lines and dams to move water from our many water bodies.
As a matter of fact PF borrowed more than 200 million dollars for irrigation, but as usual that is unaccounted for.
It is not true that the rains have failed. The rains are failing in the areas that are agriculturally productive I. E. the lower half of Zambia. Any sensible govt would try and get people in the north to go into agriculture but instead the dimwits spend their days sneering at farmers as bakachema. There’s a lot of rain water up north but those Bembas are not farmers.
#ChagwaMustFall
Borrowing is PF’s underwear.
I think this a very cleaver move by the Zambian Government. However, it doesn’t materialize mid next month, please put us out of our macroeconomic instability and misery by enrolling into the IMF programme sooner rather than later.
@Cat power long time my brother
pungwa tasakamana ubucengeshi bwa konko ubushiku bumo (the eagle doesn’t mind the shrewdness of a chicken once because it knows eventually the chicken will be caught). i have been advising my colleagues from PF about their borrowing, they never listen. now i will accused of being unpatriotic meanwhile the people or the group of people that are unpatriotic are the the so called patriotic front – at least they should have been the the unpatriotic behind
pf minion will soon defend themselves on this forum…….to them borrowing is a good remade to clear other debts and pocket the change………
Austerity measures announced in November, 2015 were just a political gimmick. Here and now is the truth and nothing but the truth. Lungu is more concerned about his security than that of the suffering Zambian because of his attitude and callous behaviour… Lungu is a sell out…
When one approaches a money lender, you have to accept their terms and conditions. An IMF bailout before or after elections does not change the long run direction of Zambia’s economy. It has implications for PF as a party but not Zambia. We have to take responsibility for our economic situation. Zambia is broke and government spending cuts unfortunately need to happen. I would prefer elected Zambians, who see the struggles of daily living in our country, determining which areas to cut spending. Not a 2 week visiting IMF team. President Lungu, it is time to face the terrible hard facts and begin to lead us to prosperity. Zambia is larger than PF or any other political party. Make the correct long term decision so that our children will be better off.
Zambia is exactly where it was in 1991 and a new govt after August has to administer tough austerity measures. PF has stolen the family treasures that took Zambia 25 years to build up.
Congratulations go to Chikwanda who in his single miserable life has managed to bankrupt Zambia twice.
#ChagwaMustFall
PF should know that with or without IMF conditions, things are rough on the ground… Ebu munshebwa… You were advised not to over borrow but you didn’t listen… Look at the austerity measures listed by the IMF… Exactly what HH has been talking about… please ba PF,atleast leave something for our children.I the deal is good as PF claims, let it be impolemented before elections, otherwise mukalyana as Zambians
Chikwanda,this old bufoon has messed us up big time.I blame the king cobra for resurrecting this finished toothless crocodile.He has been borrowing like no man’s business and now the country is worse off than it was in 2001.Lungu and his minions now know that they need the IMF bailout but as usual they are still politicking.Fellow citizens,if you make the mistake of voting for these PF vultures, mukalya amaf.i come 12th August 2016.,ndemyeba kofye
Kikikikiki, meimatunga ati borrowing is pf’s underwear, next time they hold any cabinet meeting let them not even inform the nation we know what they are always up to, borrowing!
Simply look at that man in the photo..surely what can come out of that fossil’s mouth even primary school kids wouldn’t want him as a teacher..the man is obsolete!!
Whether ECL borrows or not he’ll continue after August 11….watch the space…
Even ba wiso is ashamed of your comment.
Actually they were advised to institute a Windfall Tax, which would have captured profits from when copper was near $10,000 per tonne. No debt, no interest, no repayments. They could have made money on the downside too. They could have used the money to diversify the economy to manufacturing, agriculture and infrastructure.
Instead, they insisted that taxing the mines would make ‘foreign investors’ fly away like frightened little birds. Now, they keep harping on about tax stability, instead of just saying they want permanently low or nonexistent taxes.
Why do some people still believe PF will win the coming elections despite these glaring inadequacies? Is it symbolic of our propensity to make wrong life choices or an indication of a heavy rigging machinery in place? Sorry, things have changed now!
Robin Wigglesworth (@RobinWigg)
3/18/16, 09:43
IMF translation: Zambia is a hot stinking mess. pic.twitter.com/
Simple sayings like ‘once bitten twice shy’ teach wise people volumes. Zambia is like a cleaned pig rushing back into the mud, so to say. Some Leaders never learn, the country making the same mistake twice. Where to now, Zambia?
I too doubt the authenticity of this report…IMF are big thieving Shylock ….no wonder Kaunda did away with them “Futseke”, somehow we managed our own economy, implemented by utilising our own resources without much importation of essential commodities!
If I were PF Gov, I would not borrow a damn cent, let the IMF keep the offers on the table for a more natural calamity bail out, than an economic one!
The really stoopid thing about PF is that they had 5 years to implement what they promised they could do in 90 days. The Kafue Gorge Lower Hydro-electric Power Station could have been completed by now. Instead they went scouting for their own contractor who would give them kickbacks. Five years later we are paying $42m every month or the $660m p.a. on power imports. How many power stations could be built from that ? Itezhitezhi cost around $200m. We are now paying somebody else’s loans. As they say, a PFool and his Eurobond are soon separated.
#ChagwaMustFall
Blame this on Sata who put his uncle Chikwanda to bankrupt Zambia twice in his single miserable and pathetic life. This just shows that Zambia is culturally, morally, socially and economically bankrupt. We are like a herd of wildebeest on the Serengeti rushing to be slaughtered by the lions and crocodiles every year and their behaviour never changes.
#ChagwaMustFall
Kaunda and Chikwanda bankrupted Zambia with their silly economic policies. There’s nothing to learn from that era. Don’t go through the dregs from a failed period to try and learn about success. Simple honest countries like Botswana have built war chests from taking consistently wise decisions year in year out. Zambians with their chaotic irrational hope for miracles from charlatans like Kaunda and Sata are worse off for their gullibility.
#ChagwaMustFall
Kaunda built the infrastructure that is still operating today. Indeni was built by a Chinese state owned company. So let’s not pretend that these neoliberal economic policies from the MMD onwards through PF have not been disastrous. Including all around the world where austerity, privatisation, deregulation and ‘free trade’ have been tried – Iceland, Ireland, Greece, Argentina in the 1970s…
Lungu thinks winning elections is the only thing there is….no wonder he is a failure all round, what a shameful leader.
@Cat power (pushi) you have no manners.
Sorry, not your time HH. Surprisingly, Even in the Chibuku bars, they are fully informed about the satan that the Post and Mmembe are.
The Selling of a Country to Sharks and Vultures
It is a shame to have men and women like Mr.Lucky Mulusu to be in power and have very little understanding that what we are dealing with here these are Sharks and Vultures who do not have the interested of Zambia but to plunder while the you are looking.
I am asking all civil societies in Zambia to quickly wake up and say NO to this shallow way of leadership, These Political leaders went to the market and raised capital which has not been fully accounted for because the people of Zambia have been mute and have not demanded accountability. We are going to stay quick that now they want to drown us with irresponsible re-financing of the Nation debt with the Sub-Prime lenders.
Irresponsible decisions affects us all most especially the…