Zambia risks climbing the list of IMF addicts

By David Whitehouse
Posted on Wednesday, 16 December 2020 09:55, updated on Wednesday, 7 April 2021 18:25

Kristalina Georgieva, Managing Director of the International Monetary Fund in February 2020. (AP Photo/Jens Meyer, File)

Zambia risks joining the long-term list of African countries hooked on juice from the International Monetary Fund (IMF).

The fund is assessing how it could support Zambian reform efforts through a possible funding program. That follows a government request for a financing agreement and a December visit from IMF officials to Lusaka.

“Recipients of the IMF’s largesse rarely follow the script,” says Steve Hanke, professor of applied economics at Johns Hopkins University and an emerging market currency expert. “In the long run, most IMF programmes fail because the conditionalities attached to the programmes have dull teeth.”

Hanke cites research from Harvard University’s Robert Barro that a higher IMF loan participation rate tends to reduce economic growth and that IMF lending lowers investment. Worse still, countries that participate in IMF programs tend to keep coming back. “The IMF programs don’t provide cures but create addicts,” says Hanke.