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IMF Approves US$187 Million Disbursement to Zambia Following Successful Second Review

The International Monetary Fund (IMF) Executive Board has completed the second review under the 38-month Extended Credit Facility (ECF) Arrangement for Zambia, signaling positive program performance amid a challenging global and domestic environment. 

The completion of the review grants Zambia immediate access to approximately US$187 million, bringing the total disbursement under the ECF to about US$561 million.

Despite facing economic challenges, Zambia has met all but one quantitative performance criteria for the second review, with most structural conditionality completed. 

The authorities in Zambia are actively working on policies and reforms to restore fiscal and debt sustainability, enhance social spending, maintain financial stability, and implement structural and governance reforms to unlock the country’s growth potential.

The ECF Arrangement for Zambia, adopted on August 31th, 2022, amounts to SDR 978.2 million (about US$1.3 billion), supporting Zambia’s 8th National Development Plan. This plan focuses on achieving macroeconomic stability, sustainable debt and fiscal policies, inclusive growth, and improving the livelihoods of the Zambian people, especially the vulnerable.

The Memorandum of Understanding (MoU) between the Zambian authorities and the Official Creditor Committee (OCC), agreed upon on October 14, 2023, aligns with the June 2023 debt treatment agreement, consistent with IMF program parameters. 

The commitment to reaching an agreement with private external creditors, respecting comparability of treatment requirements set by the OCC, remains a priority for Zambia.

The Deputy Managing Director and acting chair, Ms. Antoinette Sayeh, commended Zambia’s efforts in stabilizing its economy despite external shocks. She emphasized the importance of continuing measures to restore fiscal and debt sustainability, including progressing with debt restructuring and implementing reforms critical for macroeconomic stability and inclusive growth.

Zambia’s economic performance, resilient in the face of recurrent shocks and debt restructuring delays, has prompted a growth revision to 4.3 percent in 2023. The country aims to sustain fiscal consolidation, enhance revenue mobilization, and implement public financial management reforms.

The agreed MoU with official bilateral creditors and ongoing discussions with private creditors are seen as positive steps toward restoring debt sustainability. The Bank of Zambia stands ready to tighten monetary policy, ensuring inflation falls within the monetary policy band, while financial sector reforms contribute to stability and inclusion.

Governance and structural reforms are highlighted as key factors in promoting private sector development and economic diversification. Measures such as enhancing procurement, disclosing beneficiary ownership, and combating corruption are expected to create a conducive environment for private investment and inclusive growth. Zambia also plans to integrate climate mitigation and adaptation strategies into national policies.

In conclusion, the disbursement from the IMF is expected to bolster Zambia’s ongoing efforts to navigate economic challenges and implement reforms for sustainable development. The government’s commitment to fiscal responsibility and inclusive growth will be crucial in achieving long-term stability and resilience.

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