By AARON CHIYANZO
GOVERNMENT should guard against securing an International Monetary Fund (IMF) deal with a raft of conditions that will lead to higher taxes, job cuts and other negative effects, former Finance Minister Katele Kalumba has said.
Dr Kalumba said Zambia should present to IMF conditions that were favourable for the country and providing a profile that positions the country positively.
He said the IMF sometimes impose tough conditions for the bailout packages because they assume the worst case scenarios for countries.
Zambia is in serious talks with IMF for a bailout package.
Dr Kalumba said a well constituted team of experts should give the IMF a less dramatic profile for Zambia and negotiate a better deal.
“You need to convince them that it’s not that bad because they can assume the worst case scenario. This is what happened to countries like Greece, Italy and Spain when they were in a debt crisis,” he said.
Dr Kalumba said sometimes the IMF could be misinformed about what was really prevailing in a particular country.
He however said it was the duty of individual countries to profile themselves positively and remove false presentations.
Dr Kalumba said conditions of the IMF tend to be tougher on countries working with the worst case scenarios.
In Kenya, the IMF announced a US$2.4 billion loan aimed at responding to the next phase of Covid-19 and reducing debt levels with a condition for the country to start living within its means.
That meant freezing growth of the national budget, whose annual expansion has contributed to heavy borrowing.
The second was for the government to restructure or privatise parastatals that continue to bleed national coffers, a demand that had previously come with job losses.
The IMF also demanded that the national treasury weans itself off borrowing and instead find alternative ways of raising more money through taxes.
The IMF’s technocrats and the Kenyan Government reached a staff level agreement on a 38-month programme.
IMF added that structural and governance reforms were in the offing to address weaknesses in some parastatals and strengthen transparency and accountability by implementing anti-corruption measures.
Past IMF structural reforms had mixed results and have been blamed for pushing public servants to joblessness, with little to show in terms of savings.
Kenyans started paying for services at public hospitals and schools as part of the infamous cost-sharing experiments that plunged hundreds of thousands into destitution.
