Roundup: IMF denies giving Zambia conditions for bailout program

The International Monetary Fund (IMF) on Tuesday denied that it had given Zambia conditions for a bailout program.

There have been reports that the international financial institution has given the southern African country conditions for a 1.2 billion U.S. dollars economic bailout package.

The sale of state-run telecommunications firm Zamtel and the unbundling of power utility Zamtel were among the reported conditions, which have already been dismissed by the Zambian government.

Tsidi Tsikata, head of an IMF mission which has been in Zambia since October 19, said it was premature to engage the government on a bailout package for now following two weeks of engagement.

In remarks delivered during a press briefing after the end of the mission, the official said the mission will return early next year to start normal engagements and a possible bailout program with the Zambian government.

"There is no package. I cannot discuss something that does not exist. We are going to come back and we are going to engage with authorities on the elements that are going to form part of the program, including a monitoring framework which we can use to measure progress towards objectives that will be set under the program," he said.

He however acknowledged that the Zambian economy has continued to be under stress from the impact of both external and internal shocks and that economic growth will remain sluggish this year, with end-year growth projected at 3 percent.

In its preliminary findings after the visit, the IMF mission attributed the sluggish growth to continued electricity shortages, low exports and subdued private sector consumption and investment.

According to a separate statement released by the IMF, public finances have remained strained, with fiscal performance through the three quarters of the year characterized by shortfalls in revenue and substantial spending overruns on fuel and electricity subsidies.

According to the statement, Zambia's current economic challenges could be overcome with resolute policy action such as adjustment of fuel prices to cost-reflective levels and the removal of electricity subsidies.

"The mission and the authorities discussed a broad range of measures to create fiscal space for beginning to clear government arrears, scale up social spending and reduce the fiscal deficit on a commitment basis in 2017," the statement said.

This adjustment would help to put public debt on a downward path and allow monetary policy to gradually unwind the current tighten stance, allowing the economy to recover, it added.

Fredson Yamba, Zambia's Secretary to the Treasury, said the mission by the IMF was to provide peer review to the government on the budget proposals for 2017 and on matters pertaining to the performance of the economy.

The mission was in Zambia to help assess the current economic situation, provide policy advice to restore economic stability and promote broad-based economic growth.

Apart from meeting the government, the mission held meetings with the private sector, trade unions, civil society organizations and lawmakers. Endit