Zambia Will Only Take IMF Bailout If Terms Agreeable, Lungu Saysby
Government had said aid program was inevitable by year-end
Growth in economy seen accelerating to 3.7% this year
Zambian President Edgar Lungu said Africa’s second-largest copper producer will only access International Monetary Fund support if the lender’s conditions are acceptable.
“If we find that there are conditionalities which we find acceptable, we will work with them,” he told reporters Friday in Lusaka, the capital. “If not, we will throw them out.”
The southern African nation had earlier said it was working to seal an “inevitable” aid program from the fund by the end of the year, as its economy strains under falling metal prices and a severe power shortage. Any IMF deal will probably require the government to cut subsidies on fuel and power, which the Washington-based lender in March estimated could cost the treasury $660 million this year. Increasing prices when inflation already exceeds 20 percent may be unpopular in the build up to general elections set for August.
Both the IMF and the government have said any aid program would only be finalized after the polls. Zambia faces a “key challenge” funding the growing budget deficit that Treasury Secretary Fredson Yamba forecast will reach slightly less than 8.1 percent this year. Zambia’s kwacha weakened 0.3 percent to 10.0012 per dollar at 4:31 p.m. in Lusaka, the first time it dropped beyond 10 to the dollar in more than a month.
Lungu dismissed criticism from opposition parties over the government’s plans to seek a bailout.
“There is this superstitious belief that when you embrace the IMF you’re bewitched and end up dying, the economy will die,” he said. “No, it doesn’t work like that. A lot of other countries have gone to the IMF -- we are members of the IMF and we should go there when we have difficulties.”
Economic growth will accelerate to 3.7 percent this year from 3.5 percent in 2015 as the electricity deficit is reduced by more than half and the corn harvest improves, Lungu said. Over the medium term, the pace will quicken to more than 6 percent, he said. Inflation will slow to single digits in “a matter of months,” said Lungu.