International Monetary Fund (IMF) Reaches Staff-Level Agreement with Zambia on the Second Review of the Extended Credit Facility


The Zambian authorities and the IMF crew have reached a staff-level settlement on financial insurance policies to conclude the second assessment of the 38-month Prolonged Credit score Facility-supported program (ECF). As soon as the assessment is authorised by IMF Administration and accomplished by the Government Board, Zambia can have entry to about $184 million in financing (SDR 139.9 million); Regardless of a difficult atmosphere, the economic system is displaying resilience, with actual GDP development now projected at 4.3 p.c in 2023 and 4.7 p.c in 2024. Exterior and home situations have put stress on the exterior steadiness and the trade charge, elevating inflation; Financial insurance policies will proceed to deal with restoring macroeconomic stability and debt sustainability, whereas defending well being, training, and social spending, safeguarding monetary stability, and stepping up structural and governance reforms to unlock Zambia’s development.

A employees crew from the Worldwide Financial Fund (IMF) crew, led by Ms. Vera Martin, IMF mission chief for Zambia, visited Lusaka from October twenty fifth to November eighth, 2023, to debate progress on financial and monetary insurance policies to within the context of the second Evaluation underneath the Prolonged Credit score Facility (ECF) association. The association was authorised by the IMF Executive Board on August 31th 2022, for a complete quantity of SDR 978.2 million (about US$1.3 billion). This system is predicated on the authorities’ homegrown financial reforms that goals to revive macroeconomic stability and debt sustainability, and foster increased, extra resilient, and extra inclusive development.

On the finish of the mission Ms. Vera Martin issued the next assertion:

“I’m happy to announce that the Zambian authorities and IMF employees crew reached a staff-level settlement on the second assessment of Zambia’s financial program underneath the ECF association. The staff-level settlement is topic to IMF Administration approval and Government Board consideration. Upon completion of the Government Board assessment, Zambia would have entry to SDR 139.9 million (about US$184 million), bringing the entire IMF monetary help disbursed underneath the association to SDR 419.6 million (about US$555.7 million).

“Amidst difficult situations, the Zambian economic system has carried out higher than anticipated. Development is anticipated to achieve 4.3 p.c in 2023 as non-mining non-agricultural development is greater than compensating for weak mining manufacturing this yr. Inflation pressures persist regardless of a tighter financial stance by the Financial institution of Zambia, pushed by increased meals and gas costs and a sustained depreciation of the trade charge. The present account steadiness is projected to deteriorate to a deficit of 1.8 p.c of GDP in 2023, pushed by decrease mining exports receipts and robust import development.

“The medium-term outlook stays favorable, supported by increasing mining manufacturing and the completion of the debt therapy plan, and hinges on proactive reform efforts. In a context of elevated world uncertainty, exterior draw back dangers arising from a weakened world financial outlook, commodity costs volatility and regional conflicts, prudent financial insurance policies are warranted. Constructing exterior buffers stays vital.”

“The Zambian authorities have made progress in implementing reforms underneath the Fund-supported program, together with important fiscal efforts in 2023, that are anticipated to proceed in 2024, to deal with decrease mining revenues. The first steadiness (money foundation) in 2023 is projected at 0.2 p.c of GDP, according to program parameters. Fiscal targets for end-June had been met supported by decrease present spending and better nonagricultural and non-mining revenues. Regardless of the consolidation, the authorities have upscaled social spending to help essentially the most weak and proceed to supply free main training. Close to-term reform priorities ought to deal with perennial income measures and higher money and legal responsibility administration that would scale back the financing wants, essential to revive fiscal area and debt sustainability. As well as, strengthening tax administration, eradicating tax exemptions, and actively combating tax evasion may contribute to enhance revenues and governance.”

“Additional tightening of financial coverage could also be wanted to include inflationary pressures, whereas constructing reserves will improve exterior resilience. The Financial institution of Zambia pursues reforms to boost the effectiveness of financial coverage transmission by way of strengthening the financial coverage framework and its governance. The Financial institution of Zambia can be engaged on strengthening the banking sector and selling monetary inclusion.”

“Bettering the enterprise local weather stays key for financial diversification and personal sector-led development and depends on continued efforts in direction of enhancing the anti-corruption framework and battling Anti-Cash Laundering and Combating the Financing of Terrorism; enhancing transparency, together with within the power and agricultural sector; and publishing helpful possession info for awarded authorities contracts.”

“We welcome the settlement on the MoU reached with official creditors and ongoing discussions with non-public collectors to achieve an settlement on a debt therapy. We stay up for the authorities’ continued efforts to achieve an settlement with all collectors according to program parameters.”

“The IMF employees crew is grateful to the authorities for the open and productive discussions. The crew met with Minister of Finance and Nationwide Planning Situmbeko Musokotwane, Governor Denny Kalyala, Secretary to the Cupboard Patrick Kangwa, Secretary to the Treasury Felix Nkulukusa, Deputy Governor Francis Chipimo, different senior authorities officers, representatives of the non-public sector, civil society organizations and improvement companions. The crew wish to thank the Zambian authorities for his or her cooperation, hospitality, and constructive discussions.”

Distributed by APO Group on behalf of Worldwide Financial Fund (IMF).

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