Zambia, IMF agree on steps towards aid programme by fourth quarter

April 22, 2016 6:43 AM

Zambia and the IMF began talks on an aid programme after agreeing that the country's budget deficit was unsustainable.

Visitors are silhouetted against the logo of the International Monetary Fund at the main venue for the IMF and World Bank annual meeting in Tokyo October 10, 2012.

Zambia's government has agreed targets with the International Monetary Fund, preparing the way for a support programme by the fourth quarter of the year, Zambian Treasury Secretary Fredson Yamba said on Friday.

Proposals for a sliding scale to ensure mineral royalty taxes can respond to changes in metal export prices will be put before parliament in coming weeks, Yamba said in a statement.

Zambia will provide the IMF in June 2016 with its macro and fiscal plans for the 2017 budget and for the medium term, Yamba said on Friday.

"This is meant to pave the way for their input so that once in place, the programme will not be at variance with the budget," he said.

The government will also aim to adjust electricity tariffs and fuel pump prices, while ensuring that austerity measures announced by President Edgar Lungu last November were enforced.

The IMF will send a mission to Zambia in September 2016 to finalise budget numbers with the government.

Zambia's economy is expected to grow 3.7 percent in 2016, little changed from 3.6 percent last year. Growth has been curtailed by declining demand for copper, Zambia's main export, the central bank said in February.

Moody's downgraded Zambia's long-term issuer rating to B3 from B2 late on Tuesday and changed the outlook to negative from stable, citing anticipated fiscal slippage in 2016 and the prospect of further debt deterioration.