from ARNOLD MULENGA in Lusaka, Zambia
LUSAKA, (CAJ News) – BY securing the US$1,4 billion loan deal from the International Monetary Fund (IMF), President Haikande Hichilema’s government has fulfilled a campaign promise of mending relations with multilateral lenders.
These ties were strained under his predecessor, Edgar Lungu, in power since 2015.
However, while he is on course to build bridges with the international financiers, on the domestic front, acquiring the loan has further driven a wedge between his government and the immediate past administration as well as the new president’s critics.
The loan from the IMF has proven a highly divisive issue in a country still polarised years of political turbulence that Haikande’s election in August.
Hichilema, who recently surpassed the milestone first 100 days in office, believes the three-year lending programme with the IMF is a boost to his pledge to resuscitate the economy and restructure the Southern African country’s massive debt.
Zambia, the continent’s second largest producer of copper, last year suffered the ignominy of being the first African nation to default on its debt amid the coronavirus pandemic.
Previous talks between IMF and the government on a bailout package yielded nothing, a development critics attributed to erosion of confidence in Lungu’s Patriotic Front (PF) government.
Lungu’s government defaulted on a $42,5 million payment on a Eurobond. Zambia’s debt is around $16 billion. Its debt is at 120 percent of its gross domestic product (GDP).
It currently has some $16 billion in external debt alone.
IMF projects the economy to grow by a mere 1 percent in 2021.
This week, amid a flurry of criticism, the president, through his office, had to explain the support from the IMF as “a necessity in its efforts to restructure and resuscitate the economy for the good of the country.”
“The president said the decision is in line with the United Party for National Development (UPND) manifesto which clearly states the measures that Government would take to revive the economy top among them debt restructuring.
Official confirming the deal this week, Allison Holland, Mission Chief for Zambia, said authorities had committed to an ambitious economic reform program to address the severe economic and social challenges facing the country.
“These reforms seek to remedy past weaknesses in economic governance and public financial management that led to an unsustainable debt overhang,” she said.
The envoy said the reforms underpinned the new government’s efforts to rebuild, including to boost economic resilience in the face of the ongoing COVID-19 pandemic and climate vulnerabilities.
Government, and IMF, critics are not convinced.
“Trusting the IMF is like asking Dracula to look after the blood bank,” wrote entrepreneur, Sambo Mbale.
Maiko Zulu, the political activist, said, “If you thought IMF and World Bank are the messiahs who will save us from economic woes, think again. There will never be an external solution to internal problems.”
A contentious part of the deal with IMF is the removal of subsidies on energy and agriculture, which could culminate in rising prices of basics.
This is a country where over 60 percent of the 19-million population is estimated to live under the poverty line.
“The high class will become richer, the middle class will be stable, the working class will survive but the lower class will suffer to the largest extent,” argued analyst, Rasford Makungu.
“Unfortunately the majority Zambians belong to the lower class. That’s why we are saying that IMF programme is not good for Zambia, at least not at this point,” Makungu added.
Unemployment remains an issue in Zambia, with almost a quarter of the youth population unemployed, in a country that is one of the youngest globally, with a median age of 17 years.
Anderson Banda, the ruling party provincial youth chairperson, was confident of the Hichilema’s administration.
“Unlike PF, which used to borrow for consumption, UPND will borrow for investment to grow the economy of the country.
– CAJ News