IMF cuts borrowing costs for Zambia, other countries; reduces charges, surcharges by 36%

The International Monetary Fund (IMF) has announced a landmark 36 percent reduction in charges and surcharges, a reform expected to lower borrowing costs by US$1.2 billion annually for member countries, including Zambia.

This reform represents one of IMF’s most significant changes to its financial support structure in recent years.

Managing Director, Kristalina Georgieva, made the announcement last Thursday during the Fund’s annual meetings in Washington, highlighting the move as part of a broader initiative to make IMF lending more accessible and affordable.

“For the first time in our history, we have not only met our precautionary balance target of $30 billion but have also introduced comprehensive reforms to reduce costs for our member nations,” Georgieva said.

The IMF’s reforms arrive at a pivotal time, as the organization had extended support to a record 97 countries since the pandemic through various lending programmes.

A notable element of the reform includes an $8 billion increase in subsidy resources for the Poverty Reduction and Growth Trust (PRGT) over the next five years, effectively doubling its annual lending capacity to US$3.6 billion.

Despite these changes, the IMF cautioned about global economic risks, noting that while inflation was being contained and resilience remained high, there is a risk of the global economy slipping into a low-growth, high-debt cycle.

Georgieva expressed concerns over the weakest medium-term growth outlook in decades, describing the situation as a critical juncture.

“The global economy is holding up remarkably well, but we are seeing the lowest medium-term growth outlook in decades,” she said, emphasizing the need for timely fiscal consolidation.

Georgieva urged policymakers to begin gradual fiscal adjustments, stressing the importance of managing inflation without harming job markets.

“The challenge now is to finish the job on inflation without unnecessarily damaging employment,” she added.

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