IMF disburses $187 million, as second review on Zambia is completed

The International Monetary Fund (IMF) has disbursed US$187 million after the completion of second review of the 38-month Extended Credit Facility (ECF) arrangement.

This brings the total disbursement under the ECF to Special Drawing Right (SDR) 419.64 million, about US$561 million.

Read more: IMF reaches second staff-level agreement with Zambia, paving way for $184 million funding

This, according to the IMF, was based on the authorities homegrown economic reform plan that aimed to restore macroeconomic stability and foster higher, more resilient and inclusive growth.

Addressing journalists from Washington DC on Wednesday, IMF stated that Zambia’s ECF arrangement was adopted on August 31, 2022 for a total of SDR978.2 million, about US$1.3 billion.

Following the Executive Board discussion on Zambia, Antoinette Sayeh, Deputy Managing Director and acting chair, stated that:

“The authorities have maintained their efforts to stabilize the economy despite recurrent external shocks.”

Sayeh said that the Fund had continued to take measures to restore fiscal and debt sustainability, including advancing with debt restructuring and implementing reforms which were critical to safeguard macroeconomic stability and foster durable and inclusive growth.

“Zambia’s performance under its Fund-supported program has remained satisfactory, including continued fiscal consolidation—despite lower mining revenues—and structural reform implementation,” she said.

Sayeh, however stated that sustaining the fiscal consolidation remained crucial.

“In particular, scaling up efforts to mobilize revenues, including by broadening the tax base and removing exemptions, would help preserve social spending, clear domestic arrears, and address development needs,”she stated.

Sayeh said the public financial management reforms were critical to enhance budget execution and the quality of government spending.

She indicated that prompt implementation of the Memorandum of Understanding (MoU), together with reaching agreement with private creditors on comparable terms and in line with the program’s parameters, was critical to restore debt sustainability over the medium term.

“The Bank of Zambia stands ready to tighten monetary policy further to ensure that inflation falls within the monetary policy band.

“The central bank is also committed to maintaining exchange rate flexibility and to step up the pace of reserve accumulation to strengthen external resilience,” she explained.

Sayeh stated that the reforms would help promote financial stability and inclusion.

She added that the governance and structural reforms were key to promoting private sector development and economic diversification.

“Efforts to enhance procurement, disclose beneficiary ownership, enhance access to public information and combat corruption will provide a more conducive environment for private investment and inclusive growth.

“The authorities also plan to integrate climate mitigation and adaptation strategies into national policies,” Sayeh said.

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