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IMF bailout crucial, says ZIPAR

ESTHER MSETEKA, Lusaka
ZAMBIA urgently needs an International Monetary Fund (IMF) financial bailout to help create stability and relief in the economy, Zambia Institute for Policy Analysis and Research (ZIPAR) says.
The socio-economic think tank has, therefore, endorsed Government’s desire to borrow up to US$1.3 billion from the IMF on an interest free-basis to sustain its economic recovery programme (ERP).
ZIPAR executive director Pamela Nakamba-Kabaso said without a home-grown fiscal recovery plan supported by an IMF loan, there will be adverse consequences for the local people and economy.
Dr Nakamba-Kabaso said the IMF financial package is necessary as borrowing on the domestic market will choke the private sector, as they will fail to expand their businesses due to lack of finances.
“Borrowing on the domestic market really is one of the things which has had adverse implications on the economy.The private sector is not accessing enough credit. So, if, Government continues to borrow on the domestic market, they will crowd out the already constrained private sector and this will be bad for growth,” she told journalists last week.
This was during the presentation of a policy brief titled: “Economic distress and the inevitability of an ERP,” to raise awareness among citizens on the necessity of the programme and prospects of an IMF supported programme.
Dr Nakamba-Kabaso said unlocking growth in the economy will help stimulate private sector activities through the provision of affordable credit.
“But already with high interest rate, getting credit is not affordable, and if the private sector is crowded out further, there is no hope for these businesses…The domestic market is actually not an option that Government can resolve to borrow from,” she said.
And ZIPAR macroeconomics unit senior researcher Caesar Cheelo said there is no better alternative to an IMF loan to support the Zambia-led ERP.
Mr Cheelo, however, said achieving the fiscal recovery will not come easy as Zambia’s growth is forecast to remain modest around 4.3 percent on average this year and next year.

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