THE World Bank has indicated to Zambia that effective next year, it will not offer any budget support to the country following its graduation from lower income nation to a lower middle income status, says the Deputy Minister of Finance Miles Sampa.
Mr Sampa said the government has since engaged the World Bank for financial support through the International Development Association (IDA) that provides interest-free loans to governments of the poorest countries, adding that despite Zambia graduating to a lower middle income country, poverty levels are still high.
“We are still a country that requires some levels of grants, and we are engaging the World Bank on those levels. We can only uplift the lives of people from poverty from grants and not loans,” he said.
In an interview, Mr Sampa said following Zambia’s graduation from a lower income country to a lower middle income nation, it is no longer entitled to aid related to poverty reduction.
And Mr Sampa said Government is also finalising a programme with the International Monetary Fund (IMF) on how the country will relate with the fund to be concluded before the end of the year.
Zambia’s three year Extended Credit Facility arrangement which was approved in June 2008 by the IMF came to an end in June 2011 and Government has been studying the options available for future IMF support.
Meanwhile, Government says there is need to reform the public sector, the Farmer Input Support Programme (FISP) and maize marketing to avoid budget deficit and borrowing.
The IMF fiscal monitor report 2012 launched in Tokyo at the IMF and World Bank Group annual meeting notes that Zambia’s deficit is likely to rise this year due in part to lower copper prices, along with higher public wages and delays in subsidy reforms.
Mr Sampa said the issue of subsidies is very sentimental to Zambia.
“Subsidies are targeted towards the FISP and maize marketing subsidies. We can’t have it both ways, if we continue subsidising maize, we have no choice, the budget deficit will increase and it will mean we will have to borrow to meet the expenditure of our budget,” he said.
He said there is need for Zambia as a country to be bold, bite the bullet by reforming the maize input and marketing system.
“Government is clear; we don t want wastage of resources through subsidies. It’s not subsidy which is the problem but the manner in which it’s managed,” he said.
Mr Sampa said the system is not working well and has become a huge cost on the budget.
“Zambians don’t want to get back to the HIPC (Highly Indebted Poor Countries initiative) days and equally, they don’t want to be wasting money by programmes that do not benefit the intended beneficiaries,” he said.
He said subsidies for the vulnerable small scale farmers are welcome but pointed out that in most cases the resources do not end up to the right people.
On public wages, Mr Sampa said there is need to structure the civil service so that it becomes efficient.
Commenting on the IMF calls for governments to reform the financial sector, Mr Sampa said Zambia is a step ahead of the Fund’s programme citing recapitalisation of banks.
“What the IMF is calling for in terms of reforms in the banking sector, Zambia is one step ahead and I recommend the governor.
The central bank has taken precaution in the financial sector,” he said.”
Daily Mail
World Bank To Quit Budget Funding From 2013 added by on
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I hear you, just work had and use our resources wisely
Shikulu alebomba!More years ninkufuluka bwela bwangu.Kadansa alishima aliya mu hiding.
Wow!may God help mother Zed.
Elo lwanya!
I think it will be a good development because we will start development using our capacity because i FEEL Aid has hided development in most countries some times i wounder how the world bank measure to stop funding I would have liked to see World bank exist by 2015 so that we also look at the MDGS if i look at the human development index 0.981 2011 it is still slightly below what we expect may be the world bank has just thought of stopping because there is now a good government in place with good polices maybe they want to invest money in countries like syria,greece and others,I thought when policies are good its better to invest money in that countries so that it develops
Much as the government may continue subsidizing maize production thru FISP market forces should be allowed to come into when determining price. Unlike the current situation where govt detects flow price. Its high time private sector takes up leading role in maize marketing.
Lol, lower middle-income nation? Is there such a thing? Only in Zambia ofcourse!
Not comprehended, fya kwishiba imwe abena Miles Sampa ine fyampita
Naine wine fyampita koz kwati fimofine!!!!!
It abosolutely right to withdraw budget support though very least industralised few countries can survive without external support. Zambia needs to be content with what we have as a country so many resources. I think we can make it. Stop buyin expensive vehicles for govt officials and un necessary expenses.
-it’s all paradox of being a middle fimofimo country. the govt must revamp the RR (Rural Reconstruction) programs initiated by KK in 1977. That created industries like mansa butteries, chipata bicycle assembles, gwembe gin, munushi banana scheme in kawambwa, buleya malimba irrigation scheme in lisutu, pine apple canary in mwinilunga and many more in other rural areas.
– at the moment lusaka is now zambia…
Air mukwai u are right. We are able to make it without those white punkas called world bank. It is high time we became creative and turn around the economy this great nation called zambia. Kakolwe ati shani any reflection on this item