Page 7 - AfrElec Week 36 2022

AfrElec INVESTMENT AfrElec

Zambia’s $1.3bn IMF loan may

lead to higher energy costs,

agriculture spending cuts

JAPAN ZAMBIANS are likely to welcome an Interna- However, the government is pushing for-
tional Monetary Fund (IMF) decision to provide ward with plans to increase electricity charges to
a $1.3bn loan to the country, but a possibility of cost-reflective levels by 2026. Previous attempts
higher energy costs could mar their celebrations, to increase power tariffs were abandoned after
The Africa Report writes. a backlash.
The global funder’s executive board signed “But during a special interview with the
off the facility on August 31 to assist the country national broadcaster on 4 September, [Finance
to overcome its economic challenges. However, Minister Situmbeko] Musokotwane said that the
IMF-supported programmes typically require government will proceed with ‘broad reforms’ to
participating governments to rationalise some correct the energy pricing in the country to avoid
expenditures. ‘wastage subsidies,’” according to The Africa
Ahead of the approval of the IMF facility, Report.
President Hakainde Hichilema, in power since It further notes that a publicly-funded pro-
August 2021, had embarked on a reform pro- gramme to provide inputs to about 1mn poor
cess to streamline public spending, address the farmers could be reviewed as well.
national debt and restore macroeconomic stabil- Following the approval of the IMF funding,
ity, Paris-based The Africa Report writes. there are concerns that state power utility Zesco
Zambia planned to scrap all fuel subsidies by and communications company Zamtel could
January this year but delayed its plans to rein- be targeted for stringent reforms, which could
troduce taxes on imported fuel to September include privatisation.
after global oil prices soared following the war Musokotwane said in the interview that as
in Ukraine. part of fulfilling the five-year IMF programme,
Hichilema’s government recently rejected some parastatals could be privatised. “The last
recommendations by a study funded by the thing I want to see is us failing to hire teachers
African Development Bank (AfDB) to reduce and health workers because we must put money
the electricity tariff for mining companies while in the company that is failing,” he said.™
increasing that for domestic consumers.

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