SNDP will require increase in external borrowing - IMF

SNDP will require increase in external borrowing - IMF
By Mutale Kapekele
Fri 11 Feb. 2011, 04:00 CAT

THE international Monetary Fund says the implementation of the Sixth National Development Plan will require an increase in external borrowing.

Responding to a press query on the SNDP, IMF resident representative Perry Perone advised Zambia to negotiate the best loan terms when contracting external debt for the implementation of the SNDP.

“Our preliminary view is that the SNDP sets ambitious macroeconomic targets to increase revenue collection, control recurrent expenditures, and increase public expenditures on much needed development projects,” Perone stated.

“Even though the fiscal space for development expenditures would be augmented under the proposed revenue and expenditure projections, the magnitude of the proposed development spending will require an increase in external borrowing, some of which will be on non-concessional terms. In this regard, the IMF has encouraged the Zambian government to negotiate the best possible terms for these loans and to ensure that the projects that will be financed are economically viable so that they will generate the revenues to repay the loans.”

He stated that the IMF also supported the SNDP's goal to foster broad-based economic growth stating that this will help to generate jobs and reduce poverty.

Perone stated that the macroeconomic achievements under the Fifth National Development Plan were good, given the difficult external environment during the implementation period (2005-2010).

“During the last five years, Zambia enjoyed sustained high real economic growth, inflation (which hurts the poor more than those that are well-off) was lowered to single digits, and domestic and external government debt was kept to manageable levels,” stated Perone.

“In navigating the recent world financial and economic crisis, the government pursued prudent macroeconomic policies and real economic growth in Zambia turned out to be higher than that of most other countries in the region.”