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Zambia’s growth is expected to moderate to 3.6 percent in 2023 assuming a timely agreement with official creditors on an appropriate debt treatment takes place, says the International Monetary Fund (IMF).
And Government is optimistic that working with the Official Creditor Committee (OCC) and other creditors, it will soon reach an agreement on debt restructuring.
IMF Chief for Zambia, Allison Holland, said while growth was expected to moderate to 3.6 percent in 2023, assuming a timely agreement with official creditors on an appropriate debt treatment, it was projected to accelerate over the medium term.
“This pick-up in growth will reflect the anticipated pay-off from the government’s economic transformation agenda, including a recovery in mining production driven by new and ongoing investment,” Holland said in statement issued on Thursday.
She however noted that further delays in reaching an agreement with creditors risked a worsening outlook for Zambia, delaying its return to sustainable growth, and reducing its capacity to repay.
Read more: Zambia making ‘promising progress’ on reducing fiscal deficit, public financial management
She therefore urged official creditors to move forward and agree an appropriate debt treatment in line with the financing assurances they provided in July 2022.
“In light of Zambia’s strong performance under the Fund-supported programme, the critical next step is to secure an agreement with official creditors on a debt treatment consistent with the IMF Executive Board-approved programme parameters and debt targets,” Holland said.
She also said in line with the government’s commitments under the Fund-supported programme, fiscal performance had been very strong.
Spending, she said, had remained within budget limits and that more importantly, social spending had increased in line with government targets.
Holland stated that ambitious structural fiscal reforms were contributing to raising domestic revenues, strengthening public financial management and debt management, and transparency.
“This rebuilding of budget credibility is critical for restoring fiscal and debt sustainability in the medium-term. Continued efforts to ensure value for money by following public procurement regulations and providing transparency will also contribute towards fighting corruption,” she said.
Meanwhile, Finance and National Planning Minister, Situmbeko Musokotwane, said government remained optimistic that working with the OCC and other creditors, would soon reach an agreement on debt restructuring.
Musokotwane said this would help in achieving economic recovery and attain sustainable growth.
“We are grateful to the IMF and all our creditors for their continued support. We will continue to work together to ensure that a debt restructuring deal for Zambia can be achieved as swiftly as possible.
“It is essential that we continue to access IMF funding to anchor our reform agenda and invest in development. It is in everybody’s interest that Zambia succeeds,” he said.
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