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Vol 59 No 13

Published 29th June 2018


Zambia

Putting on the brakes

The government is taking steps to curb the ballooning debt, but will they be enough to make an IMF programme possible?

The goal is to bring the risk of 'debt distress' from 'high' to 'moderate'. Even this modest target will probably elude Finance Minister Margaret Mwanakatwe because the government's spending habits have become so ingrained, insiders in Lusaka say. Mwanakatwe announced a series of measures on 14 June designed to staunch haemorrhaging public finances. They include commitments to 'indefinitely postpone' all borrowing in the pipeline, cancel some of the more than US$5 billion in contracted loans yet to be disbursed, stop issuing state guarantees to bankrupt parastatals, and curb waste. The aim is to restore relations with the International Monetary Fund and investor confidence. Talks with the IMF over a US$1.3 billion bailout fell apart last July over the government's refusal to abandon extravagant borrowing. Mwanakatke tried and failed, Lusaka insiders say, to entice an IMF delegation to Lusaka in the wake of her recent announcement.

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