An Economist says the US$45 million World Bank policy support to Zambia will help ease pressure on government finances and support macroeconomic stability.
World Bank, through the International Development Association, has approved approximately US$45 million Development Policy Operation (DPO) under the Second Zambia Climate and Economic Resilience Programmatic Development Policy Financing, reinforcing international support for Zambia’s ongoing macroeconomic reform programme and efforts to strengthen economic resilience.
Commenting on the development, Twaambo Hamusute said the funding, which goes directly toward supporting the national budget, will assist government in financing key expenditures while reducing the need for domestic borrowing.
Mr. Hamusute told Money News in an interview hat such external support helps fund specific government programmes and budget lines, which in turn reduces the financial burden on the Treasury.
“First of all, obviously the fund is supporting specific budget lines. So it reduces the strain on basically government revenue and minimizes the need for government to borrow money to meet service delivery,” Mr. Hamusute said.
He noted that the financial support comes at an important time as the country approaches an election period when government spending pressures typically increase.
Mr. Hamusute cautioned that without such support, the government might be forced to increase borrowing from the domestic market, which could negatively affect the economy.
“Otherwise, without that kind of support, then we would begin to see government going into the market borrowing money, which could lead to increase in interest rates and eventually you begin to see inflation also kicking up,” he noted.
He stressed that the funding is therefore important for maintaining economic stability.
Meanwhile, Mr. Hamusute said funding from international cooperating partners such as the World Bank usually comes with strict transparency and accountability conditions.
He added that in many cases, the funds are tied to specific projects, making it easier for authorities and the public to track how the money is spent, but encouraged citizens to use public budget documents to monitor government spending.
“The Yellow Book is there for everybody to see. If you want to see how that money is being used, it is quite easy to just get to the Ministry website. You can see how those funds are utilized,” he said.
According to Ministry of Finance and National Planning, Development Policy Operations are budget-support instruments provided by the World Bank to Governments undertaking policy and institutional reforms that strengthen macroeconomic management, improve the investment climate, and enhance resilience to economic and environmental shocks.
The approved operation will support Zambia’s reform agenda through three interlinked policy pillars, each anchored on specific reforms already undertaken by the Government.
