[Zambia] IMF expresses concern over poverty in Zambia

from African News Dimension

THE International Monetary Fund (IMF) executive board has expressed concern over the widespread poverty in Zambia. And the IMF has advised Zambia to priorities the clearing of arrears to various contractors and reforming the pension system this year.

According to a statement on the IMF's website announcing the conclusion of Article IV consultations with Zambia, the IMF noted that although poverty was declining, it still remained a matter of concern.

"Directors were however encouraged by the authorities' commitment to increase further spending on poverty-reducing programs (PRPs) and implement a structural reform agenda aimed at increasing productivity and raising incomes," the statement read in part adding that the IMF directors were impressed with the maintenance of macroeconomic stability last year despite some adverse supply shocks.

"They directors welcomed the sustained efforts to strengthen the public finances which have contributed to improved macroeconomic stability and strong growth. Directors noted the favorable performance of non-traditional exports, and the recent strong recovery of the mining sector following privatisation of mining companies," the statement further read.

"Directors agreed that prospects are favorable for achieving higher economic growth and lower inflation in the years ahead. They noted that attaining single-digit inflation by 2007 would be a historic accomplishment that would further investment, financial intermediation, and good labour relations. Noting the potential pressures on policies during an election year, directors urged the authorities to maintain disciplined economic and financial policies to safeguard the gains achieved."

The IMF directors also welcomed the government's determination to resolve domestic arrears and fund contingent liabilities.

"They agreed that clearing arrears to contractors should be a high priority. Directors urged the authorities to proceed expeditiously with a reform of the pension system. They welcomed the initial steps taken by the authorities to provide budgetary resources over the medium term to meet projected obligations to the public sector pension fund, but emphasized that a fundamental reform is necessary to avert a major risk to the public finances."

The Article IV consultations were concluded on January 11, 2006.
Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually annually. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies.

On return to headquarters, the staff prepares a report which forms the basis for discussion by the executive board. At the conclusion of the discussion, the managing director, as chairman of the board, summarises the views of executive directors, and this summary is transmitted to the country's authorities.