By BUUMBA CHIMBULU
THE flood of investment flows Zambia will get by the vote of confidence from the International Monetary Fund (IMF) will be the biggest drivers of economic activity to spur growth, says Financial Analyst, Mutisunge Zulu.
According Mr Zulu , these will by far exceed the size of the Extended Credit Facility (ECF) and that sets the pros of getting onto an IMF package.
Mr Zulu started that attainment of the key milestone with the IMF Staff Mission team signaled the biggest hurdle Zambia faced and that the next stage was to present the findings before a board for approval after which the extended credit facility line would be granted for draw down.
The agreement is for US$1.4 billion which various schools of thought question if it will be enough to solve Zambia’s hurdles.
“Balance of payment support must be viewed from a positive externality standpoint because the flood of flows Zambia will get by the IMF’s vote of confidence, will be the biggest drivers of economic activity to spur growth,” Mr Zulu said in his analysis on the Zambia-IMF agreement.
Mr Zulu emphasised that the biggest outcome of the IMF agreement was that it signaled positivity around an accelerated debt restructure process.
This, he explained, would also signal credit rating adjustments upwards for the sovereign to provide an opportunity for international credit lines for Zambia to open once again.
“Banks whose risk appetite was constrained by sovereign posture could start to be ready for greater latitude in 2022 and thereafter.
He recalled that it was clear at inception that creditors would require more assurance than just words to restore fiscal fitness and guarantee obligation absorption but that IMF bailout would provide greater comfort at such a time.
“Suffice to say an IMF package is a precursor to debt restructure which the authorities have earmarked for completion by end of first quarter of 2022. Zambia has for years suffered severe lack of flows in the veins of the economy due to vagueness around policy and prudent fiscal will,” Mr Zulu stated.
By BUUMBA CHIMBULU