Wed, 14 Dec 2016 10:12:15 +0000
THE Zambian Government has not yet formally written to the International Monetary Fund (IMF) to request for a programme and therefore the fund will not take any action, says the IMF resident representative, Alfredo Baldini.
And the IMF has advised Government to halt refinancing of the Eurobonds until the financing conditions on the market have relaxed.
Mr Baldini said in an interview that a country requesting for a programme was required to formally write to the fund according to Article 4 of the consultation process.
He said the IMF would return to Zambia in February 2017 for
consultations as required by Article 1V of the fund.
“There has not been a formal request as such yet, but we are expecting that the authorities will do so in the weeks ahead.
“Ultimately, it is up to the authorities to ask for a programme. But we will come here for Article 4 consultations for sure, and then we will see if there is opportunity to have programme discussions,” he said.
Mr Baldini said the IMF was confident that the programme would start in the first quarter of 2017.
He also explained that the IMF considered factors such as economic performance, balance of payments, economic performance and level of reserves before engaging a country in a programme.
“It is however important to understand that with these financial arrangement, the IMF does not lend for budget support, it is more for balance of payments needs.
“It is a precautionary savings that a country will put in place in reserves to send a stronger signal to the outside and become more resilient in balance of payments in future,” he said.
Meanwhile, Mr Baldini cautioned Government against refinancing the Eurobonds next year as indicated in the 2017 national Budget.
Mr Baldini said Government must wait for the current financing conditions on the market to ease, as they were tight, hence making it expensive to refinance.
“Even if you refinance, your Budget and also the fact these Eurobonds are falling due in 2022, 2024 and 2025 and we are not there yet. We would caution the Government to tap into international markets at this moment. They better wait until financing conditions get easier,” he said.