IMF gives Zambia $187m

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IMF

IMF gives Zambia $187m

By Edwin Mbulo in Livingstone

THE IMF has provided Zambia with immediate access to about US $187 million.

And the International Monetary Fund (IMF) has projected Zambia’s annual inflation average to be at 7.8 per cent by 2025.

In a statement released Wednesday evening, the IMF executive board which completed the second review under the 38-month Extended Credit Facility (ECF) arrangement, noted that the Zambian government has been advancing on policies and reforms to restore fiscal and debt sustainability.

“The Executive Board of the International Monetary Fund (IMF) completed today (Wednesday) 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),” the IMF revealed.

The Fund said Zambia’s ECF arrangement was adopted on August 31, 2022, for a total of SDR978.2 million (100 per cent of quota, about $1.3 billion).

“It supports Zambia’s homegrown 8th 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. 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 IMF said. ‘’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.”

The IMF added that Zambia’s programme performance has been satisfactory despite a challenging domestic and global environment.
It said all but one quantitative performance criteria for the second review were met.

“The authorities requested a waiver of non-observance 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,” the Fund said further.

It said Zambia’s economic performance has proven resilient despite recurrent shocks and delays in debt restructuring.

“Growth was revised upwards to 4.3 per cent 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,” the Fund said.

And following the executive board’s discussion on Zambia, deputy managing director and acting chair Antoinette Sayeh said: “The authorities have maintained their efforts to stabilise 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.”

The IMF added that Zambia’s performance under its Fund-supported programme has remained satisfactory, including continued fiscal consolidation-despite lower mining revenues-and structural reform implementation.

The Fund said sustaining fiscal consolidation remains crucial.

“In particular, scaling up efforts to mobilise 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,’’ said the IMF.

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