Meanwhile, it has expressed happiness at the continued growth of the economy.
The IMF said the reduced Budget deficit would also help in removing fiscal funding pressures and allow for a normalisation of monetary policy and reduction in interest rates.
Government has projected a reduction of 0.4 per cent in the 2014 Budget deficit to 6.2 from 6.6 per cent following the rebasing of the economy which saw it grow to about 25 per cent larger than earlier estimated.
Following the rebasing of the economy, the Budget deficit for 2014 now stands at 5.2 of the gross domestic product (GDP) or 6.2 if not rebased.
IMF mission team leader
"Moreover, a solution to the impasse regarding VAT refunds for exports is urgently needed,"
He said maintaining strong growth in the period ahead would require forceful measures to address the emerging vulnerability.
He was happy that the
The IMF team had been in the country from
The mission was happy that the economy had continued to grow and remained strong at 6.5 per cent.
"However, the recent steep depreciation of the Kwacha is raising inflationary pressure and expansionary fiscal policy has created a large budgetary imbalance,"
Secretary to the Treasury Fredson Yamba said during the same briefing that the reduction in the Budget deficit reflected the deliberate measures taken by Government to bring down the deficit in line with the stated target of three per cent of the GDP in the medium term.
He said the measures taken include re-alignment of expenses to priority areas, removal of subsidies on maize and fuel, limiting the operations of institutions such as the
Others include the stabilisation of the wage bill and enhancing corporate governance of state-owned enterprises.
"The measures are not one off but will continue over the medium to long term, leading to fiscal consolidation and fiscal prudence,"
He was optimistic that Government would maintain the single digit inflation target by the end of the year, especially with the new crop which comes on the market from July.
He was happy that the BoZ had taken measures to address these issues by limiting liquidity in the market and encouraging big market players to conduct their business in the more responsible manner.
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