- The International Monetary Fund (IMF) today answered the widespread criticism regarding its Zambia policies. A new report concludes that 8,000 to 9,000 newly qualified teachers in Zambia could not be hired due to "IMF policies". The Fund however maintains it had never "prohibited the Zambian government from hiring new teachers."
A recent paper released by the Global Campaign for Education states that 8,000 to 9,000 newly qualified teachers in Zambia have not been hired. The paper, entitled 'Undervaluing teachers - IMF policies squeeze Zambia's education system', concludes that this situation is a consequence of instructions from the IMF to the Zambian government.
- It is regrettable that the paper's discussion of developments in Zambia contains so many inaccuracies and misconceptions, today says IMF Director of External Relations, Thomas Dawson, in an open letter to the Global Campaign for Education.
The case of Zambia has often been used as an example of the IMF's failures in the fight against poverty. After decades of "structural reforms", closely following the IMF recipe, poverty has only increased in Zambia and the social sectors have been decimated. A freezing of the government's wage bill and in hiring, allegedly following IMF instructions, this year caused new criticism against IMF policies in Zambia.
According to Mr Dawson, however, this was not the case. "The performance of the Zambian economy has improved considerably in recent years," the IMF official maintains. Economic growth has averaged more than 4 percent per year since 2000, he explains, although admitting that growth needed to be "stronger and sustained over a longer period" to have an effect on poverty in Zambia.
Mr Dawson claims that the comprehensive domestic debt accumulated to finance the budget deficit over the last years now has become the most serious threat to Zambia's economy. One of the main reasons for this borrowing had been the government wage bill, which rose sharply from 5.3 percent of GDP in 2000 to 8 percent of GDP in 2002, due to "large wage increases," according to the IMF.
- In April 2003, government wages were raised substantially and a new housing allowance was introduced, the IMF official says. "These measures were not part of the budget approved by Parliament, and were not otherwise sanctioned by Parliament. Moreover, the increase in the wage bill was again to come from higher wages and benefits rather than from the hiring of more teachers or other priority employees," he adds.
In July 2003, the IMF and the government of Zambia thus agreed that payment of this large wage bill and related allowances "would have jeopardised the recovery" of the national economy. The increased wage bill could neither be financed through cuts elsewhere in the budget, by "printing money" nor through additional government borrowing, it was established in the talks.
Consequently, the IMF officials claim, the government agreed to take steps to "contain the growth in civil service compensation in 2003 and set the basis for returning the wage bill to a more manageable level in 2004." Negotiations between the govenrment and the disappointed trade unions were started.
As a result, "some ministries found that their budget allocations did not allow for recruitment of new staff during the year," Mr Dawson goes on explaining. "Also, the savings from the removal of some 4,000 employees from the payroll during the year were not used to hire more priority staff, such as teachers and health care providers, but to hire more employees in the central administration."
While the IMF official holds the Zambian government is to blame for only hiring administration employees, he raises a second argument outside the control of the IMF: "There are over 7,000 teachers ready to leave the service on retirement but not able to do so because the government cannot afford to pay their termination benefits. These teachers have therefore remained on the payroll, receiving their salaries but not working."
According to Mr Dawson, this is the greatest problem regarding the criticised failure in teachers' recruitment. The IMF and Zambia's development partners were however working to find ways to resolve this problem, he said. "The government of the Netherlands is this year providing a grant of nearly Kwacha 50 billion (US$ 10 million) to cover unpaid termination benefits to allow 7,000 teachers to leave the service and to allow replacements to be hired."
- The economic programmes that the IMF has supported in Zambia ... have not included limits on government hiring in health or education, Mr Dawson emphasised. Teachers, doctors, and nurses had been specifically excluded from the freeze on civil service hiring in a Zambian government document of 2002, and IMF programmes this year did not include a freeze on hiring in the public sector at all, he added.
It remains to be seen whether the Zambian government agrees to the version of the IMF as it struggles with impatient trade unions over the national wage bill. In Zambia, word is that the government has only a very limited influence over its own budget after sticking to IMF programmes.
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