Zambia will work on a new programme with the International Monetary Fund (IMF) rather than seek an extension of its loan agreement, which expires at the end of the month, the Ministry of Finance said on Thursday (8).
The government had previously considered a one-year extension of its Extended Credit Facility, which would have represented additional financing of around US$145 million.
However, the Zambian government has now confirmed its decision to opt for a full successor programme.
“This decision should be understood as a reflection of the completion of the current programme and the transition to a successor programme,” the Ministry of Finance said in a statement. “It should not be interpreted as a disengagement or any weakening of commitment to reform.”
The existing programme was established in 2022 to help Zambia restore debt sustainability after the 2020 default and is scheduled to undergo its sixth and final review by the IMF’s executive board later this month.
On Wednesday, the IMF said Zambia had dropped plans to extend the programme, which negatively affected the country’s bonds on Thursday morning.
The bonds recovered part of their losses after the announcement that the Southern African country would seek a full programme.
At 11:06 GMT, Zambia’s dollar bond maturing in December 2053 was quoted at 72.13 cents on the dollar, down 0.4 cents, according to Tradeweb data.
The IMF estimates that Zambia’s economy grew by 5.8% in 2025 and expects inflation to return to the central bank’s target range of 6% to 8% within two years.
Negotiations with the IMF on the new programme are expected to begin shortly after the conclusion of the ECF.
President Hakainde Hichilema, who faces elections in August amid persistently high inflation, is seeking to maintain political stability during this transition and has reaffirmed the government’s commitment to economic reforms.
Source: Reuters
