Sata’s Death Seen Posing Risks as Zambia-IMF Talks LagMatthew Hill
The death of Zambian president Michael Sata will delay talks planned with the International Monetary Fund and reintroduces fiscal risks for the southern African country, according to Moody’s Investors Service.
“Should interim political instability cause a slowdown in policy making, the odds of the government agreeing program terms with the IMF in a timely manner are less likely,” analysts including Dubai-based Jeff Christiansen said today in an e-mailed report. The delay “reintroduces risk to the country’s fiscal and external position.”
Zambia had sought talks with the IMF to help with curbing a budget deficit fueled by higher spending on wages and subsidies. An IMF mission to Zambia, which was due to take place this month, has been postponed to Dec. 4, Tobias Rasmussen, the IMF’s resident representative in Africa’s second-largest copper producer, said in an e-mailed response to questions today.
“This mission will cover the key issues that need to be addressed in a possible fund program,” he said, declining to speculate on the timing of a program.
Sata died in London last week, raising questions as to who will succeed him in elections due to be held by the end of January. While Vice President Guy Scott is acting leader, there are questions over whether Zambia’s constitution prevents him from being a candidate because his parents were born in Scotland.
Economic policies will remain sound, irrespective of who becomes president, Fredson Yamba, secretary to the treasury, said in an e-mailed statement on Oct. 30.
The government will “remain amenable to external reviews” from ratings companies and international organizations such as the IMF, he said.
Zambia’s budget must be passed by Parliament by Jan. 1, when it’s due to be implemented. The government may lose some of its grip on fiscal tightening if the interim leadership removes a civil-servant wage freeze to attract support ahead of the January polls, Moody’s said.