Zambia has received a disbursement of $184 million from the International Monetary Fund (IMF) following the fifth review of its Extended Credit Facility (ECF) programme. With this latest release, the total funding provided under the programme now stands at approximately $1.6 billion since its approval in August 2022, according to Bloomberg.
The 38-month agreement aims to strengthen macroeconomic stability, restore fiscal and debt sustainability, improve governance, and foster more inclusive economic growth. The IMF emphasized that the programme’s success hinges on the consistent implementation of ongoing reforms.
According to IMF First Deputy Managing Director Gita Gopinath, “Zambia’s economy has shown greater resilience than initially expected, despite facing a historic drought in 2024.” The recovery in agriculture, mining, and services is playing a significant role in driving economic rebound.
Real GDP growth is projected at 4% in 2024, rising to 5.8% in 2025. Inflation, already on a downward trend, is expected to drop to 11% by the end of 2025, supported by improved agricultural output and robust performance in the mining and services sectors.
Despite these improvements, the IMF noted shortfalls in three indicative targets: non-mining tax revenues fell short of expectations, payment arrears persisted, and reserve accumulation was below forecast. Of the 14 structural benchmarks set in the programme, only six have been met; four were postponed, and the remaining four have been carried over to the next review. Nevertheless, the IMF granted a waiver for Zambia’s breach of a performance criterion on non-concessional external debt during the fourth quarter of 2024. The revised 2025 budget, already aligned with the programme’s commitments, included a prior action considered essential for the approval of this fifth review.
The IMF now deems Zambia’s public debt sustainable, although the country remains exposed to high levels of risk. Preliminary agreements have been reached with most commercial external creditors, and negotiations with official creditors are ongoing.
Finally, the IMF called for continued reforms in governance, the energy sector, and anti-corruption efforts to ensure sustained and more equitable economic growth.
Source: Diário Económico
