The International Monetary Fund has confirmed that it has rejected Zambia’s request for emergency COVID-19 assistance because the country has unsustainable levels of debt.
Dr Gerry Rice, director of communications, IMF confirmed that the Zambian authorities have requested emergency assistance from its international partners, including the Fund in addition to an earlier request from Zambia for Fund support for their broader economic reform programme.
Rice reiterated that any IMF financial support, including emergency financing, is contingent on steps to restore debt sustainability.
He was speaking during a regular virtual press conference with Journalists from across the world at the IMF headquarters last week.
“As indicated in last year’s Article IV consultation with Zambia, and as published in the report, Zambia’s public debt is on an unsustainable path, under current policies, as the Minister said in February, and we note the government’s commitment to restore debt sustainability through fiscal policy adjustment and debt management,” Rice observed.
“Let me also say this to try and help and explain the context. It’s the Fund’s role to help countries address their medium-term viability, economic viability, and we are always and everywhere prepared to perform this role. That’s what we do.”
Rice stressed that: “Our rules are there to help us keep a laser-like focus on designing programmes that will work to help the country escape its problems, and they reflect decades of experience, of what works and what does not. I say that because particular care must be taken in unsustainable debt situations. Why? Because a poorly designed programme can make matters worse for a country and its citizens.”
He reiterated that it’s important to get that right, and with strong commitments and actions, by a country and its creditors, a way forward can be found, which the Fund can support. ” I won’t speak for other international institutions, but I know they are as dedicated as we are to resolving problems and more recently, in the case of Zambia, the authorities have expressed their intention to restructure Zambia’s debt, and in this context, to hire debt advisors,” he said. “The bottom line is we continue to have active discussions with the Zambian authorities on their economic response to the pandemic, as well as their medium-term macroeconomic objectives and policies.”