By Scoop Reporter
ZAMBIA’S fiscal pressures in 2020 have increased due to significantly lower revenue collections and higher spending needs while the number of people living in extreme poverty is expected to increase, the International Monetary Fund (IMF) has observed.
The IMF staff team led by Dhaneshwar Ghura has held and completed virtual meetings from June 22 to July 10, 2020 to discuss Zambia’s request for emergency support under the Rapid Credit Facility.
At the conclusion of the virtual discussions, Mr. Ghura said the social and macroeconomic impact of the COVID-19 shock, on top of a severe drought last year, will be heavy.
He says growth is forecast at around 5 percent in 2020, substantially lower than envisaged at the beginning of the year.
“Growth is forecast at around ‑5 percent in 2020, substantially lower than envisaged at the beginning of the year, and the number of people living in extreme poverty is expected to increase.
“Fiscal pressures in 2020 have increased due to significantly lower revenue collections and higher spending needs. Zambia has requested support under the G20 Debt Service Standstill Initiative, which would provide temporary fiscal space this year,” Mr. Ghura said.
He says discussions covered both near- and medium-term policies to address these challenges and the underlying macroeconomic vulnerabilities, including the main elements of the revised 2020 Budget with a focus on spending for the COVID-19 health, social and economic response.
He says discussions will continue as Zambia determines its policies and priorities in the formulation of the revised 2020 Budget, as well as the medium-term fiscal stance needed to restore debt sustainability, revive growth, and lower poverty.
“IMF staff held meetings with Finance Minister Bwalya Ng’andu, Bank of Zambia Governor Denny Kalyalya, senior Government and Bank of Zambia officials; and the private sector.
“Staff express their gratitude to the Zambian authorities for the constructive discussions that were held and look forward to continuing discussions,” he said.
The IMF discussions centered on Zambia’s request for emergency support under the Rapid Credit Facility to support the government’s efforts to address the social and macroeconomic impact of the COVID-19 pandemic.
The IMF notes that the COVID-19 shock has significantly impacted economic prospect with growth this year expected to be negative, poverty has likely increased, and fiscal pressures have increased further with lower revenues, higher expenditure needs, and an already high debt service burden.
Discussions focused on the economic policies needed to respond to the fallout from the COVID-19 pandemic and that discussions will continue on the fiscal stance and policies in order to move forward with the request for Fund support.