IMF Responds to Frequently Asked Questions on Zambia’s Economic Program”
Eric Lautier, the IMF Resident Representative in Zambia, addressed key questions about Zambia’s homegrown program supported by the IMF through a US$1.3 billion Extended Credit Facility (ECF), in a recent Question and Answer outreach.
The program aims to assist Zambia in overcoming economic challenges, including a default on external debt in November 2020.
Mr. Lautier explained that Zambia’s economic plan, developed after the default, received approval from the IMF Executive Board in August 2022. The 38-month program focuses on fiscal sustainability, debt restructuring, social spending, and governance improvements.
He highlighted the positive progress made by Zambia in implementing prudent policies and reforms, despite challenges such as lower copper prices and production.
Mr. Lautier clarified the terms, stating that performance criteria are specific quantitative targets, while structural benchmarks are critical measures supporting the implementation of structural reforms. Zambia has shown commitment to achieving targets, with missed criteria being addressed collaboratively with the IMF.
In response to inquiries about Zambia’s macroeconomic stability, Lautier acknowledged the difficulties faced in 2023 due to external factors but commended the government for implementing tighter monetary policies, fiscal measures, and engaging with private creditors to address the debt situation.
Challenges like decreased mining production and fluctuating copper prices persist, but Lautier emphasized Zambia’s tenacity in stabilizing its economy.
Lautier detailed the government’s fiscal adjustments, including prudent spending and increased revenue collection from the non-agricultural, non-mining sector. Social spending on essential sectors like education and health has been maintained, showcasing the commitment to uplifting vulnerable populations.
Lautier acknowledged challenges such as exchange rate depreciation, inflation, and ongoing debt restructuring. Despite these, he highlighted the Zambian economy’s resilience, projecting real GDP growth at 4.3 percent in 2023 and 4.7 percent in 2024. Structural reforms, fiscal discipline, and progress on debt restructuring are deemed crucial for sustainable and inclusive growth.
Eric Lautier emphasized the importance of safeguarding progress and continuing reforms to attract private investment and support macroeconomic stability. The ongoing debt restructuring discussions with private creditors remain a critical aspect of Zambia’s economic recovery.
