DISCUSSIONS on debt restructuring underway between Zambian government and the International Monetary Fund (IMF) is unlikely to yield any positive results before the elections in August.
The talks, which started on 11 February, are due to end on 3 March.
Indigo Ellis, associate director at strategic advisory firm, Africa Matters in London, pointed out that they are at least a sign that relations between Zambia and the IMF are improving.
However, Mr Ellis said there is little prospect of meaningful results within the narrow time frame before the election.
“It is highly unlikely that an IMF support package will be forthcoming before the general election,” Ellis argues.
He added, “We should write off the pre-election period for an IMF support package – spending will balloon and budgeting is written off to secure an incumbent win.”
Zambia’s election winner will face a choice between relying on China and rebuilding Western market trust after its Eurobond default in November 2020.
And senior financial economist at NKC African Economics, Irmgard Erasmus, is optimistic that in the medium term, the IMF can act as a “policy anchor” – helping to restore credibility.
Ms Erasmus added that the central bank’s decision this month to raise the benchmark interest rate by 50 basis points to 8.5 percent suggests an openness to guidance from the IMF.
She notes that some of Zambia’s liabilities are only vaguely recorded, making it hard to guess at the country’s overall debt levels.
“The IMF needs to conduct a comprehensive debt sustainability analysis to assess Zambia’s liabilities before any staff programme can start. This is an unpalatable prospect for President Lungu ahead of the vote, given the risk of “uncomfortable truths about historic borrowing” being found,” she says.