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Zambia: IMF Executive Board Completes Second Review Under the Extended Credit Facility for Zambia and Approves U.S.$187 Million Disbursement


Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the second review of the 38-month Extended Credit Facility (ECF) Arrangement for Zambia. The completion of the second review of the ECF arrangement allows for an immediate disbursement of SDR 139.88 million (about US$187 million), bringing Zambia’s total disbursement under the ECF to SDR 419.64 million (about US$561 million).

Zambia’s ECF Arrangement was adopted on August 31, 2022, for a total of SDR978.2 million (100 percent of quota, about US$1.3 billion). It supports Zambia’s homegrown 8 th National Development Plan that seeks to entrench macroeconomic stability, attain debt and fiscal sustainability, foster inclusive growth, and improve the livelihood of the Zambian people, especially the vulnerable (see Press Release No: 22/297 ).

The Zambian authorities agreed on a Memorandum of Understanding (MoU) with the Official Creditor Committee (OCC) on October 14, 2023, that reflects the June 2023 debt treatment agreement, in line with the IMF program parameters. The authorities remain committed to reaching an agreement with private external creditors that respects the comparability of treatment (CoT) requirements as defined by the OCC and is consistent with IMF program parameters.

Program performance has been satisfactory despite a challenging domestic and global environment. All but one quantitative performance criteria for the second review were met. The authorities requested a waiver of nonobservance for missing the end-June 2023 net international reserve target as they have put in place corrective measures. Four out of seven structural benchmarks were met, with two others completed with minor delays.

Economic performance has proven resilient despite recurrent shocks and delays in debt restructuring. Growth was revised upwards to 4.3 percent in 2023 thanks to strong performance in the non-agricultural and non-mining sectors, despite weakened mining production. The authorities continue taking steps to restore fiscal and debt sustainability, raise and safeguard social spending, preserve financial stability, and intensify structural and governance reforms to unlock Zambia’s growth potential.

Following the Executive Board discussion on Zambia, Ms. Antoinette Sayeh, Deputy Managing Director and acting chair, issued the following statement:

“The authorities have maintained their efforts to stabilize the economy despite recurrent external shocks. Continuing to take measures to restore fiscal and debt sustainability, including advancing with the debt restructuring, and implementing reforms are critical to safeguard macroeconomic stability and foster durable and inclusive growth.

“Zambia’s performance under its Fund-supported program has remained satisfactory, including continued fiscal consolidation–despite lower mining revenues–and structural reform implementation. Sustaining the fiscal consolidation remains crucial. In particular, scaling up efforts to mobilize revenues, including by broadening the tax base and removing exemptions, would help preserve social spending, clear domestic arrears, and address development needs. Public financial management reforms are critical to enhance budget execution and the quality of government spending. The authorities are also making efforts to enhance governance and transparency in public debt management.

“The agreed memorandum of understanding (MoU) with official bilateral creditors, formalizing the agreement on a debt treatment consistent with the program’s parameters reached in June 2023, and the authorities’ good faith efforts with private creditors to reach an agreement consistent with the program’s parameters and comparability of treatment (as defined by the Official Creditor Committee) are welcome. Prompt implementation of the MoU, together with reaching agreement with private creditors on comparable terms and in line with the program’s parameters, is critical to restore debt sustainability over the medium term.

“The Bank of Zambia stands ready to tighten monetary policy further to ensure that inflation falls within the monetary policy band. The central bank is also committed to maintaining exchange rate flexibility and to step up the pace of reserve accumulation to strengthen external resilience. The authorities’ financial sector reforms will help promote financial stability and inclusion.

“Governance and structural reforms are key to promoting private sector development and economic diversification. Efforts to enhance procurement, disclose beneficiary ownership, enhance access to public information, and combat corruption will provide a more conducive environment for private investment and inclusive growth. The authorities also plan to integrate climate mitigation and adaptation strategies into national policies.”

Zambia: Selected Economic Indicators, 2021-25

2021

2022

2023

2024

2025

Proj.

Proj.

Proj.

Output

Real GDP growth (%)

6.2

5.2

4.3

4.7

4.8

Prices

Inflation annual average (%)

22.0

11.0

11.0

11.4

7.8

Inflation end-of-year (%)

16.4

9.9

13.0

8.6

7.0

Central government finances

Revenue (% GDP)

22.4

20.4

20.9

21.2

21.9

Expenditure (% GDP)

30.5

28.2

27.7

27.4

27.3

Fiscal balance (cash basis, % GDP)

-8.1

-7.8

-6.8

-6.1

-5.4

Fiscal balance (commitment basis, % GDP)

-13.9

-5.4

-6.4

-3.8

-3.3

Public debt (% GDP)

112.1

110.9

Money and Credit

Broad money (% change)

3.7

24.5

18.4

15.6

13.0

Credit to private sector (% change)

-7.8