(DAILY MAIL) IMF team coming next month

IMF team coming next month
By NKOLE CHITALA

A MISSION from the International Monetary Fund (IMF) is expected to visit Zambia next month to conduct a final review of the Poverty Reduction and Growth Facility (PRGF) arrangement. The IMF team conducted the first review of PRGF from September 17 to 26 this year.

Bank of Zambia (BoZ) Governor Caleb Fundanga said a similar review would be carried out to conclude discussions with the Zambian authorities in December.

“A follow up mission would be undertaken to conclude discussions with the Zambian authorities in December 2008,” he said at quarterly media briefing in Lusaka on Wednesday.

The PRGF is the IMF's concessional facility for low-income countries. Its loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5 and half-year grace period on principal payments.

In June this year, the IMF approved a three-year, PRGF arrangement for Zambia amounting to US$79.2 million) in support of the country's economic policies aimed at alleviating poverty and sustaining growth.

The decision enables Zambia to request the first disbursement equivalent to US$11.3 million.

The first IMF PRGF review had preliminary indications saying all the benchmarks for June 2008 had been met. There was also a broad agreement on the macro economic outlook for 2008.

Dr Fundanga said the IMF mission expressed satisfaction with the performance of the country’ economy despite adverse shocks related to increases in world food and fuel prices.

The economic growth is however envisaged to slow down this year due to relatively poor harvest and the electricity crisis.

The mission also observed that fiscal policy was weaker than planned mainly on account of the huge supplementary expenditures undertaken and the fuel subsidies which might lead to revenue losses.

The new PRGF arrangement succeeds a previous arrangement that was successfully completed in September 2007.

And the second FinScope Demand Surveys is expected to be conducted during the fourth quarter of this year.

This follows the signing of a contract between the BOZ and the Ministry of Commerce, Trade and Industry to facilitate the release of K1.4 billion by the Private Sector Development Programme (PSD).

BoZ said the survey would be undertaken by FinMark Trust Zambia Limited, who had been contracted on condition that they work with local consultant to build capacity in the area of financial sector research.