Mutati also failed to convince the IMF on how Zambia was going to be accountable and more transparent when the country was gravitating in the direction of totalitarianism.
This follows the incarceration of UPND leader Hakainde Hichilema on treason charges.
This move has sparked outrage among the opposition, civil society, the church and the international community, with the recent condemnation coming from United States Senator Ben Cardin who has written a letter to President Edgar Lungu demanding Hichilema’s immediate release.
"The IMF do not have a serious problem with our planned revenue measures but they have a problem with our expenditure side which keeps ballooning our deficit despite firm attempts from Treasury to spend within our means," a source close to the transaction has revealed.
“And generally, they believe we are not doing well on the governance index.”
Prior to his departure for Washington, Mutati announced that Zambia would be seeking an up to US $1.6 billion loan from IMF after Cabinet approved that the country could borrow from the Bretton Woods lender to help ease the pressure on foreign currency worsened by need to interest payments on Eurobonds.
After failing to convince President Edgar Lungu to agree to an IMF package when the team from Washington visited Zambia last March, Mutati was hoping to pull a last minute deal during the just-ended Spring Meetings before the June 30 deadline when its board will meet to approve all loans.
But according to the statement issued by finance ministry public relations officer Chileshe Kandeta, Zambia and IMF failed to clinch a deal.
“As the months come-by, Zambia will be seeking consolidation and closure of discussions for the planned IMF supported Economic Stabilisation and Growth Programme once policy issues and benchmarks are mutually agreed,” Kandeta revealed in a statement.
According to the sources, Zambia’s remaining option would be get on IMF deal next year.
“The board [of the IMF] meets twice a year – in June and December; so, failure to clinch a deal now means Zambia will not be under consideration when the board [of the IMF] meets in June and so, the only window remaining is the December meeting at which all loans that will approved will only be disbursed in 2018,” explained the sources.
In the build-up to the Spring Meetings and Mutati’s announcement that Cabinet had approved engagement with IMF, the kwacha has shown considerable appreciation against major convertible currencies as investors hoped the Fund’s inspired economic recovery programme would help contain government wasteful expenditures blamed for current fiscal deficit seen at almost 10 per cent of the GDP.
The last IMF supported programme for Zambia was between 2008 and 2011.
Mutati’s team comprised national planning minister Lucky Mulusa, deputy Secretary to the Cabinet – finance and economic development Christopher Mvunga, Secretary to the Treasury Fredson Yamba, Bank of Zambia governor Dr Denny Kalyalya, Ministry of Finance permanent secretary – economic management Mukuli Chikuba.