BUUMBA CHIMBULU writes
@SunZambian
ZAMBIA, as one of the countries with emerging markets, should focus on containing debt while prioritising needed infrastructure and social spending over recurrent expenditure and poorly targeted subsidies, says the International Monetary Fund (IMF).
In its ‘World Economic Outlook’ update for July 2019 report the fund says the countries with emerging markets should also ensure that macro prudential policies had adequate capital and liquidity buffers to guard against disruptive shifts in global portfolios.
“Efforts to minimise balance sheet currency and maturity mismatches remain vital at a time when financial sentiment can rapidly switch to risk-off mode and will also ensure that these vulnerabilities do not hinder the essential buffering role of flexible exchange rates,
“Countries such as Zambia should focus on containing debt while prioritising needed infrastructure development and social spending over recurrent expenditure and poorly targeted subsidies,” it says
This, says the fund, was particularly important in low income developing economies to help countries advance toward the United Nations Sustainable Development Goals.
Meanwhile, the Fund said the recent softening of inflation gave central banks the option of becoming accommodative.
The IMF say this could be useful especially where output was below potential and inflation expectations were anchored.
The Fund also says debt has increased rapidly across many economies.
