IMF awaits govt solution to overspending

The International Monetary Fund (IMF) has told Zambia that unless it cuts spending and privatises state-owned companies, US $100 million earmarked to support the economy would be withheld. An IMF official in Zambia on Monday told IRIN the government had exceeded its budget by 300 billion kwachas (about US $70 million) and had not "sufficiently explained the overspending". "The IMF has made it clear to the government that unless it adequately satisfies a number of IMF requirements, which includes budget control, the funds will not be disbursed. Government officials have said that they would provide a plausible reason for the overspending, but this has not materialised as yet," the official said. However, the official said he could not say what the implications of withdrawing the letter of intent were, as the IMF was anxiously waiting for the government's position. Zambia's acting secretary to the Treasury, Situmbeko Musokotwane, said: "We are making an effort to resolve this issue as the withholding of the funds would impact on the government's ability to deliver services. But up until now we have not come up with concrete steps." He added that a team of Zambian government officials had gone to Washington to discuss the problem directly with the IMF. Zambia is one of the least developed countries which qualify for the Highly-Indebted Poor Countries (HIPC) debt-relief programme of the IMF and World Bank. In January this year President Levy Mwanawasa described Zambia's US $6.5 billion debt burden as "intolerable". The country announced a 2003 budget of US $1.4 billion, more than half of which would be financed locally. The rest was expected to come from international donors.