The International Monetary Fund (IMF) is prepared to hand the Zambian government a US$1.2 billion economic lifeline on condition the Southern African country sells Zambia Telecommunications Company (Zamtel).

Fiscal deficits as a result of fluctuating global copper prices has impacted on the country's economy and forced authorities to seek help from the IMF.

According to official documents seen by ITWeb Africa, the IMF has made the sale of Zamtel a prerequisite because of the substantial amounts of money being used to try to recapitalise the loss-making telco.

The Minister of Finance Felix Mutati said he cannot discuss the issue in the media as the IMF team is only expected in the country at the end of October for discussions over the package.

He said the government will only state its position after these negotiations have taken place.

Other conditions set by the IMF include the removal of subsidies on fuel and electricity.

"The government is placing emphasis on the removal of unnecessary subsidies as part of the prudent fiscal management," Mutati said.

The government recently transferred the management and operation of Zamtel to the Industrial Development Corporation (IDC) after failing to secure US$300 million investment in the company to make it viable and be able to compete with MTN Zambia and Airtel Zambia.

In 2010, the company was sold to LapGreen Networks of Libya by the previous government after failing to recapitalise it afterwhich the current administration repossessed the company in 2012 claiming there was corruption in the original sale.

And since 2012, the company has been making losses and is currently on its knees financially, according to last year's Auditors General's report.

Zamtel is the country's smallest operator with less than two million customers.