Zambia will next year scarp fuel and electricity subsidies as part of a structural economic adjustment program under the International Monetary Fund (IMF), the country’s finance minister said.
The Southern African nation, which is Africa's second top copper producer, has recently reached a staff-level agreement for a $1.4 billion bailout with the fund.
In a statement in the capital Lusaka on Wednesday, Finance and National Planning Minister Situmbeko Musokotwane said the adjustment was necessary to halt the negative cash bleed on the national treasury through subsidy support.
“The government is presently spending $67.4 million every month subsidizing fuel prices,” Musokotwane said, adding: “On an annual basis, this amounts to $809 million and it is this expenditure that has kept fuel prices below the actual prices.”
Musokotwane said maintaining the status quo is not an option as doing so will escalate poverty, adding the move is essential to secure debt relief and attain long-term stability.
“The heavy debt burden ($14.5 billion) that Zambia carries is at the core of some of the serious socio-economic problems witnessed in Zambia in recent years. To prevent these risks from materializing into realities, we need to work with the IMF,” he added.
Meanwhile, Chibamba Kanyama, a former IMF communications officer for Africa, urged the government to ensure effective communication with citizens on the program.
Juba Sakala, an executive director of the Zambia Consumer Association, said separately that most of the country’s 18 million population lived on a shoestring budget, adding that an anticipated hike in fuel and electricity prices will have negative effects on citizens.
By James Kunda