Nairobi - Zambia
will conclude a deal with the International Monetary Fund for as much as $1.6
billion by the end of June, Finance Minister Felix Mutati said.
“We will conclude by the end of the second quarter,” Mutati
said in an interview Wednesday in Nairobi,
the Kenyan capital. “There is no question on whether the deal comes through or
not. The deal is coming through.”
The country has been talking about getting IMF aid since
2014 but an agreement has been delayed by two presidential elections, which
made the required reforms politically unattractive. A team from the
Washington-based lender visited Zambia
last month and will return at the end of May to continue the
discussions, according to Alfredo Baldini, the fund’s representative in
the country.
The southern African nation, the continent’s second-biggest copper
producer, has struggled with ballooning budget deficits in recent years as
metal prices fell and government spending increased.
Read also: IMF sees 'subdued' growth for sub-Saharan Africa
The IMF is evaluating Zambia’s loan application and the
nation can secure $1.3 billion to $1.6 billion, Mutati said. “You submit and
have a conversation,” he said. “They have internal evaluation; they come back
and ask questions. It’s a typical process that happens to all countries without
exception.”
‘Growth Enabler’
The IMF loan would be a “growth enabler” and help the
government to broaden its sources of external credit, Mutati said. Zambia’s
external debt has increased to $6.9 billion while the total debt stock stands
at about $10 billion, according to the government. It has sold $3 billion in
Eurobonds, the most recent sale being $1.25 billion in 2015.
The IMF forecasts Zambia’s economic growth will
accelerate to 3.5 percent this year, from 3 percent in 2016. That’s close to
worst performance since 1998, when the economy contracted by 0.4 percent.
Copper has gained 18 percent over the last 12 months in London but is still 38 percent down over the
last six years.
Economic growth is buoyed by rising foreign-exchange
reserves, a stable currency and increasing metal prices that have boosted
export earnings, Mutati said.
“It’s not an issue about the actual figure, the issue is
about what financing gap we want to fill,” Mutati said. “We will get from other
sources using the IMF as a launchpad.”
Zambia
won’t spend beyond its means and is cutting expenditure on capital projects
that the economy doesn’t need to make debt manageable, Mutati said.