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The International Monetary Fund (IMF) board has approved an augmentation of Special Drawing Rights (SDR) of about US$385.7 million for Zambia.
Antoinette Sayeh, IMF Deputy Managing Director, announced this following the completion of the third review of Zambia’s 38-month Extended Credit Facility (ECF) Arrangement.
The completion of the review allowed for an immediate disbursement of about US$569.6 million, bringing Zambia’s total disbursement so far under the ECF-supported programme to approximately US$1.1 billion.
Sayeh noted that Zambia’s ECF Arrangement, initially approved on August 31, 2022, for US$1.3 billion, has now increased access to about US$1.7 billion following Wednesday’s augmentation.
“The programme supports Zambia’s home-grown Eighth National Development Plan that seeks to entrench macroeconomic stability and attain debt and fiscal sustainability,” Sayeh said.
The plan also aims to enhance public governance and foster inclusive growth to improve the livelihood of the Zambian people, especially the vulnerable.
Sayeh stated that the program performance had been satisfactory despite a challenging domestic and global environment.
She reported that all quantitative performance criteria targets and all but one of the indicative targets for the end of 2023 were met.
“The authorities have also made progress in their structural reform agenda, with all continuous and end-December 2023 structural benchmarks and all but one end-March 2024 structural benchmark being completed on time,” she added.
She noted that Zambia was grappling with a severe drought that had significantly impacted agriculture and electricity generation, affecting a substantial share of the population.
Consequently, growth projections for 2024 have been revised down to 2.3 percent from 4.7 percent and the 2024 budget had been adjusted to accommodate the drought’s impact.
“Despite these challenges, the authorities remain committed to supporting macroeconomic stability, restoring fiscal and debt sustainability, clearing arrears, and addressing Zambia’s humanitarian needs,” Sayeh stated.
She highlighted that the Zambian authorities were also taking steps to improve governance and advance structural reforms to foster growth.
Sayeh also mentioned that Zambia was working on implementing the October 2023 agreement reflecting the debt restructuring agreement with the Official Creditor Committee (OCC) through bilateral agreements, marking a critical step in the restructuring process.
Zambia reached a restructuring agreement with Eurobond holders on March 25, 2024, which aligns with IMF programme parameters, and the OCC confirmed comparability of treatment among creditors.
Following the consent solicitation launched on May 13, the bond exchange was settled on June 11, 2024.
Zambia continues to engage in negotiations with other commercial private creditors, aiming for an agreement by year-end.
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