A Tale of Two Countries: Lessons from Zambia and Ghana in Engaging the IMF
Zambia’s last programme with the International Monetary Fund (IMF) expired in 2011. At that time, the country had established sustained macroeconomic stability and robust growth underpinned by conservative fiscal and monetary policies as well as a conducive business environment for private sector development. In 2015, however, the Zambian economy experienced a number of exogenous shocks which, coupled with a new expansionary fiscal policy stance since 2012, introduced new macroeconomic instabilities, slowed down growth, eroded the fiscal space and threatened the balance of payments position. In response, fiscal authorities initiated talks with the IMF in 2016 towards a Fund-supported programme. The paper is a combination of retrospective comparative review of the engagement of two developing countries, Zambia and Ghana, with the IMF in relation to financial and economic support programmes, and prospective assessment of the macroeconomic outlooks of the two countries based on the most recent IMF macroeconomic projections available. The main purpose of this paper is to assist Zambian stakeholders including the fiscal, planning and monetary authorities, civil society and the general public to understand the evolution of the relationships between the IMF and each of the two African States as well as the benefits and pitfalls of these varied relationships.