GOVERNMENT should be careful not to borrow more money after being in the International Monetary Fund (IMF) programme as the country will have more access to credit from the market.
Being on an IMF programme means that Zambia will now access more credit and this can lead to the country’s debt stock more than doubling, warns Civil Society Organisation Debt Alliance Coordinator Wakumelo Mataa.
Mr Mataa said Zambia could draw lessons from countries such as Ghana’s experience on an Extended Credit Facility (ECF) emanating from the rapid accumulation of debt that came due to the improvements in credit ratings as investor confidence improved.
“While the IMF program helped Ghana to resolve some of its key macroeconomic challenges, it also meant that Ghana could now access more credit and this led to the country’s debt stock more than doubling since 2015, steadily climbing from 54.2 percent of Gross Domestic Product (GDP) that year to 76.6 percent at the end of 2021.
“What this in tells is that Zambia may have similar access to such advantages, and as it strives to grow and stabilise its macroeconomic outlook, the privilege of investor confidence and access to financing should be capitalised upon and be used as partner and key ingredient to the economic recovery agenda,” he said in a statement.
Mr Mataa stressed that care should be taken to adhere to the debt ceilings being proposed in the IMF programme.
He observed the need to ensure that while borrowing to cushion current challenges, the large expenditure of these funds should be used to enhance traceable avenues of resource mobilisation for it to create its own sustainable financing that is consistent with addressing and supporting Zambia’s challenges and plans beyond the IMF programme.
“Ghana’s problems were predominantly fiscal, as it utilised continuously greater loans to plug its double-digit fiscal deficit and this could be avoided by Zambia if expenditure plans are consistently aligned with available resources but with a target for creation of further sources of revenue, especially during the implementation of the programme,” Mr Mataa said.
Finally, he said, what was noted from Ghana was that there was very little transparency and engagement with key stakeholders such as the CSOs and citizens, the programme since carried out in exclusion of key partners that the government much needed to make it a success.
“A lesson for Zambia from this is that there will be need for intensified stakeholder engagements, including Civil Society Organisations to enhance accountability to ensure this programme results in an inclusive success for all Zambians,” Mr Mataa said.