Lusaka – Having inherited a near-empty purse and under pressure to nurture green shoots of recovery, Zambian President Hakainde Hichilema’s government says it will implement a raft of reforms primarily designed to cut unnecessary expenditure and stimulate revenue generation.
Among these measures are curbing foreign travel by government officials, reviewing mining policies and re-negotiating debts.
New Finance Minister Situmbeko Musokotwane – who is in his second stint as treasury chief – has said he is well aware of the burden of expectation following President Hichilema’s August 12 election victory, but is confident that the ship can be turned.
Dr Musokotwane was Finance Minister under Presidents Levy Mwanawasa and Rupiah Banda, and this time around will have his hands full dealing with Zambia’s foreign debt of over US$13 billion. He will be hoping relations cultivated in his prior tenure as Finance Minister, as well as during his time with international financial institutions, will smoothen the parth.
Zambia is seeking a relief package of US$1.3 billion from the IMF.
“Unless we do something to the budget, then the budget will be mainly for paying salaries and also servicing debt,” with nothing left over to invest in developing the country, Dr Musokotwane told the media last week.
He reaffirmed Zambia’s desire to conclude talks with the IMF on a lending programme by November, saying release of such funds would help realign the economy, tame inflation that is ranging around 25 percent, reduce the budget deficit, and boost foreign currency reserves that presently stand at US$2.8 billion, or one-and-a-half months import cover.
“The answer is to talk to the people we owe money so that we can pay at a slower pace stretched over a longer period,” he said.
President Hichilema has said his administration would work hard to improve economic conditions, but counselled patience and unity of purpose.
Dropping commodity prices, particularly of copper, and the COVID-19 pandemic combined with other pre-existing factors to undermine Zambia’s economic position, and the country last year defaulted on debt repayments.
Around US$3 billion is owed in Eurobonds, US$3.5 billion is bilateral debt, US$2.1 billion is owed to multilateral lending agencies such as the IMF, and US$2.9 billion is due to commercial banks.