THE IMF announced on Wednesday the completion of the third review of Zambia’s Extended Credit Facility, approving an immediate disbursement of $569.6 million. Additionally, the IMF has increased its total financial assistance to Zambia from $1.3bn to $1.7bn to help the country address severe drought conditions and ongoing economic challenges.
The increased financial support aims to mitigate the impact of a severe drought that has caused significant crop losses and affected power generation across the southern African nation.
Antoinette Sayeh, IMF Deputy Managing Director, praised the progress made by Zambian authorities in implementing economic and structural reforms despite the humanitarian challenges posed by the drought. ‘Going ahead, coordinated macroeconomic policies, continued efforts to restore fiscal and debt sustainability, and consistent reform implementation will be key to addressing the impact of the drought, preserving macroeconomic stability, and bolstering growth,’ Sayeh stated.
Recently, Zambia emerged from a protracted debt-restructuring process that took more than three-and-a-half years, serving as a cautionary example for the G20’s Common Framework designed to assist low-income countries with unsustainable debt burdens. The lengthy process deterred investment, constrained economic growth, and impacted local financial markets.
In response to these challenges, Zambia’s finance minister requested parliamentary approval last week for additional spending of ZK41.9bn kwacha ($1.65bn) to help repay external debt and address the effects of the drought.
The IMF’s increased financial support is expected to provide crucial relief for Zambia, helping the country navigate its economic and environmental challenges while promoting stability and growth.
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