Zambia, MCC sign deal towards $400m compact

Washington DC
THE Zambian delegation at the International Monetary Fund (IMF) and World Bank spring meetings in Washington has taken advantage of in-person bilateral meetings on the side-lines to submit formal drought relief requests to the two Washington lenders as well as United States of America and Norway.
Minister of Finance and National Planning Situmbeko Musokotwane is leading the delegation, which includes Secretary to the Treasury Felix Nkulukusa and Bank of Zambia Governor Denny Kalyalya among others.
And following a consultative meeting between United States Millennium Challenge Corporation (MCC) on Tuesday, where progress regarding the development of the second Compact for Zambia, was discussed, MCC and Zambia have yesterday signed an Aide Memoire to record the mutual understanding of the scope and objectives of the proposed compact.
The signing of the Aide Memoire signifies the beginning of the final stage of the compact development process that will lead to the signing
of the second compact estimated at more than US$400 million before the end of 2024.
Dr Musokotwane signed on behalf of Zambia and MCC principal vice president for compact operations Kyeh Kim did so for the other side.
MCC, an agency of the US Government, provides large grants to deserving countries to implement infrastructure projects to support economic growth and poverty reduction.
It provided the first grant for investment in water, sanitation and drainage infrastructure in select areas of Lusaka worth US$355 million in 2012.
Dr Nkulukusa says cooperating partners have responded positively now that Government has outlined specific measures to mitigate the impact of the drought.
Speaking to prospective investors at the JP Morgan-hosted meeting on Zambia’s economic and monetary policy outlook, Mr Nkulukusa said the country has learnt key lessons from the debt-restructuring battlefield process.
He said Zambia is on the way to achieving full fiscal sustainability while preserving social sector spending for those in need.
Mr Nkulukusa said the country is reforming Zambia Revenue Authority (ZRA) to improve domestic resource mobilisation and tighten control of expenditure while improving cash management.
“On the drought situation that has affected hydro-power generation, the mines have agreed to pay higher charges for imported power because they don’t want to reduce production but the challenge is that the entire region is affected and there is nowhere to import required quantities,” he said.
Dr Kalyalya said despite recent headwinds regarding rising inflation and fluctuations in the forex market, Zambia’s growth outlook is still very promising with the economy projected to grow by over five percent in 2028.
“We have had challenges with inflation and depreciation of the currency due to elevated maize and fuel prices and low inflows of FX, mainly from the mines that recorded low production,” he said.
“But we expect FX inflows to increase with the revamping of operations at Mopani and Konkola Copper Mines and the outlook for copper prices is positive.”..