The International Monetary Fund (IMF) Executive Board has completed its second review of Zambia’s Extended Credit Facility (ECF), resulting in the disbursement of approximately US$187 million. This move follows the approval of the first review in July 2023, which allowed for the disbursement of approximately US$188 million. The total disbursements to date now stand at US$561 million, out of the cumulative sum of US$1.3 billion envisaged under the 38-month ECF program with the IMF, approved on August 31, 2022.

The ECF funds come with highly concessional terms, featuring zero percent interest and an extended grace period. The ECF is anchored in the Zambian Government’s homegrown economic reforms designed to restore macroeconomic stability, achieve fiscal and debt sustainability, and foster higher, resilient, and more inclusive growth. The program is set to run until October 2025, with regular six-month performance reviews. The next review is scheduled for April 2025.

Reflecting on this pivotal development, Finance and National Planning Minister Dr. Situmbeko Musokotwane welcomed the decision of the IMF Executive Board, noting the country’s economic resilience amid considerable challenges. He expressed gratitude to all stakeholders involved in ensuring the economic transformation journey remains on course, acknowledging positive growth, strong fiscal performance, and continued engagement with creditors on debt restructuring.

Dr. Musokotwane reiterated the government’s commitment to meeting ECF program objectives, calling on citizens and the international community for continued support. Acknowledging the necessity of stringent reform measures, he emphasized their crucial role in creating jobs, fostering private sector growth, and improving livelihoods across all regions.

The successful IMF Executive Board review holds significant importance for Zambia for several reasons:

Endorsement of Economic Reforms: The government’s commitment to economic transformation reforms receives a strong endorsement.

Investor Confidence: The review enhances and sustains investor confidence, positioning Zambia as a preferred destination for foreign direct investment in key sectors.

Resource Unlocking: The approval unlocks resources from other development partners, including the World Bank, African Development Bank, and various multilateral and bilateral partners.

Debt Restructuring: The review strengthens the path to the debt restructuring exercise, aligning with broader policy goals.

The government’s envisaged policy thrust includes fiscal consolidation, improved public financial management, increased social spending, financial stability preservation, and intensified structural and governance reforms to unlock Zambia’s growth potential.

In a virtual press briefing, IMF Chief for Zambia, Vera Martin Mercedes, commended the Zambian government for sustained policies and commitment to macroeconomic and fiscal stability. She acknowledged the government’s significant efforts to address economic challenges and noted that part of the disbursement would go towards budget support and implementation. The third review is expected around June 2024.