IMF dismisses Zambian borrowing plan, putting loans on hold

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(FILES): This April 5, 2007 file photo shows the International Monetary Fund logo at IMF headquarters on Pennsylvania Avenue in Washington, DC. The IMF announced November 2, 2009 the sale of 200 tonnes of gold to India's central bank, nearly half the amount targeted for sale over the coming years to shore up IMF finances. The total sales proceeds are equivalent to 6.7 billion dollars, the IMF said. AFP PHOTO / Files / TIM SLOAN (Photo credit should read TIM SLOAN/AFP/Getty Images)

LUSAKA (Reuters) – The International Monetary Fund has rejected Zambia’s latest borrowing plans, saying they risk making it harder for the country to sustain its debt load, the IMF said on Friday.

Zambia had hoped to have a $1.3 billion loan agreement with the IMF completed early this year, Treasury Secretary Fredson Yamba said in November. The IMF’s rejection puts those plans on hold.

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It was the second time the IMF had rejected a Zambian proposal. In August 2017, it also turned down borrowing plans it said threatened debt sustainability.

IMF staff then requested new borrowing plans before it would resume talks on a lending programme, the IMF said from Washington in a written response to a press query.

“However, the latest borrowing plans provided by the authorities continue to compromise the country’s debt sustainability and risk undermining its macroeconomic stability and, ultimately, living standards of its people,” the IMF said.

“Against this background, any future programme discussions can only take place once the Zambian authorities implement credible measures that ensure debt contraction is consistent with a key programme objective of stabilizing debt dynamics and putting them on a declining trend in the medium term.”

Treasury officials could not be reached for comment.

Zambia’s total public debt at the end of August 2017 stood at $12.45 billion representing 47 percent of gross domestic product.

The IMF will continue to engage with Zambia through regular discussions and technical assistance, the fund said.

Zambia and the IMF agreed in October to chart a new path towards debt sustainability after the IMF delayed the conclusion of talks, saying it was at high risk of debt distress.

Editing by James Macharia, Larry King

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