Mwanawasa warns of tough times ahead

President Levy Mwanawasa warned Zambians of a difficult year ahead as the country returns to a belt-tightening International Monetary Fund (IMF) programme in order to qualify for further funding and debt reduction. In his New Year address on Wednesday, Mwanawasa said his government would exercise maximum budgetary restraint and fiscal discipline to revamp the economy. "The year ahead is not going to be an easy one," he warned. "Painful as this decision may be, in the medium and long term perspective, it is in the best interest of our country," Mwanawasa said. Zambia overshot its 2003 budget by 610 billion kwacha (about US $130 million) resulting in the IMF and other donors withholding US $175 million in funding. Mwanawasa said there had been "some misunderstandings with our cooperating partners" over the government's commitment to privatisation, and "some budgetary mishaps", which shifted the date for Zambia to reach completion point and significant debt relief under the Highly Indebted Poor Country's initiative from December 2003 to June 2004. In an effort to gain IMF approval for its Poverty Reduction and Growth Facility, and regain donor confidence, the government accepted an interim staff monitoring system. The programme, introduced in July 2003, allows the Fund to measure and assesses economic performance each month. "We are on the right track. By December we should have reached all of the benchmarks and parameters we have set for ourselves. This will hopefully signal to the IMF that we are serious about budget control. So far there has been two assessments and the feedback has been promising," director of planning and economic management in the finance ministry, James Mulungushi, told IRIN in October.