(Ecofin Agency) – In August 2022, the IMF approved a $1.3 billion aid program for Zambia under the Extended Credit Facility for 38 months. The next disbursement could positively influence the ongoing negotiations with official creditors on Zambia’s public debt.
The Zambian authorities and the International Monetary Fund (IMF) have reached an agreement in principle for the disbursement of $118 million under the Extended Credit Facility (ECF), after a two-week mission. This is the announcement made by the Bretton Woods institution in a press release published Thursday, April 6, 2023.
This decision by the Fund comes at a time when the Zambian government is taking action to restructure its public debt.
Lusaka has, in fact, requested debt relief of $8.4 billion between 2022 and 2025, during negotiations with its creditors. The IMF’s approval of the ECF prompted the country’s main official bilateral creditors, notably China and France, to renegotiate the debt which stood at $17.3 billion at the end of 2021.
« An agreement with official creditors on debt treatment within program parameters would provide the necessary funding guarantees said Allison Holland, Chief of Mission for Zambia.
The Bretton Woods institution did not fail to highlight the economic performance recorded by the country despite the endogenous and exogenous shocks to which the Zambian economy has been confronted.
« The Zambian economy remains relatively resilient with robust growth of 4.7% in 2022 despite weaknesses in the mining and agricultural sectors. Inflation has remained in single digits since May 2022, but is coming under increasing pressure with the sustained depreciation of the exchange rate. The tightening of monetary conditions in February by the Bank of Zambia was an appropriate policy response said Ms. Hollad.
Since the approval of the ECF agreement in August 2022, this next financing will bring the cumulative amounts disbursed to $376 million, or 28.92% of the total amount expressed at $1.3 billion.