Lusaka, 13 July 2023 – The Government of Zambia welcomes the approval of the first review of Zambia’s programme by the IMF Management and Executive Board. The completion of the review enables the second disbursement of IMF financing and gives Zambia access to approximately US$188 million.
The completion of the review follows the Staff-Level Agreement (SLA) reached between Zambia and IMF in April 2023 and the debt restructuring deal agreed between Zambia and the Official Creditor Committee in June 2023. The IMF has commended Zambia for successfully implementing a number of reforms to strengthen public financial management and good governance, reduce the fiscal deficit and increase vital social spending.
Approval by the Executive Board of the first review marks an important step in cooperation with the IMF and the country’s journey towards economic recovery. This progress should also support our ongoing engagement with private creditors, including bondholders, with whom Zambia remains committed to finding an agreement on comparable terms as soon as possible, to resolve the issue of Zambia’s debt overhang.
Speaking on the IMF announcement, Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, MP, said:
“We are pleased to see that the IMF Executive Board has approved the review and recognises the progress Zambia has made. The disbursement provides much-needed support for the Government to continue making positive progress with our reform agenda. We remain committed to achieving fiscal and debt sustainability, reducing poverty, and laying a solid foundation for inclusive and sustainable growth. We are grateful to the IMF and our creditors for their continued support. Our priority is to reach an agreement on debt restructuring with our private creditors as soon as possible to leave the problem of our debt overhang behind us.”
In a statement following the announcement, IMF Managing Director, Ms. Kristalina Georgieva, said:
“The authorities have made commendable efforts over the past two years to stabilize the economy, despite the continuation of significant external shocks. Going forward, it will be important to sustain their commitment to the strong policies needed to safeguard macroeconomic stability, restore debt sustainability, and promote durable and inclusive growth.”
The IMF funding will booster Zambia’s economic reform agenda and will further boost economic resilience.
Notes to editors:
The IMF approved an ECF programme for Zambia in August 2022. As part of the programme, the IMF carries out scheduled regular reviews, assessing performance in areas including restoration of fiscal and debt sustainability; improving debt management and transparency; strengthening governance and financial stability; and reducing corruption vulnerabilities.
Zambia has made significant progress on its economic reform agenda. In August, 2022 the IMF Board approved an SDR 978.2 million (about US$1.3 billion) 38-month ECF arrangement for Zambia to help restore macroeconomic stability, foster higher, more resilient, and more inclusive growth and also address the country’s Balance of Payments needs. The US$1.3 billion is to be drawn in 7 equal instalments with the first instalment drawn in August last year upon board approval with the subsequent instalments to be drawn every six months after review and board approval.
During the first programme review in April 2023, the IMF mission noted that Zambia had met all benchmarks, showed significant progress in stabilising the economy and restoring fiscal credibility. Following this approval of the first review of Zambia’s programme by the IMF Management and Executive Board the second disbursement of IMF financing will be enabled with an instalment of approximately US$188 million.
In June 2023, Zambia reached a deal with its official creditors on comprehensive debt treatment. The agreement covers US$6.3 billion in outstanding debt and delivers an economic reduction of close to 40%. Zambia will pay its official creditors about US$750 million in the next decade, compared to close to US$6.0 billion that was due under our previous contractual arrangements.
A ministerial statement by the Minister of Finance and National Planning on the debt restructuring agreement with official bilateral creditors is available here.
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Issued by:
Public Relations Office
MINISTRY OF FINANCE AND NATIONAL PLANNING