The International Monetary Fund (IMF) Executive Board has today completed the 2nd review of the Extended Credit Facility (ECF) for Zambia. This results in the disbursement of approximately US$ 187 million.
This is the second successful review following the approval of the first review made in July, 2023, which enabled the disbursement of approximately US$188 million from the Fund. Total disbursements to date now stand at US $561 million out of the cumulative sum of US $1.3 billion envisaged under the 38-month ECF programme with the IMF (approved on 31st August, 2022, and earning the very first disbursement of US$186 million). The funds under the ECF Programme are at highly concessional terms i.e. zero percent interest and a long grace period.
The ECF is based on the Zambian Government’s homegrown economic reforms that aim to restore macroeconomic stability, achieve fiscal and debt sustainability, and foster higher, resilient, and more inclusive growth. The ECF Facility runs up to October, 2025. This means that the country will continue with the reform programme based on agreed objectives, annual budgets, and the Eighth National Development Plan (8NDP). Programme performance will also continue to be monitored on a six (6) months basis. The next review, is expected in April, 2024. Therefore, it is imperative that the country continues to adhere to the planned policy and structural reform agenda.
Reflecting on this important milestone in Zambia’s economic transformation journey, Finance and National Planning Minister Dr SITUMBEKO MUSOKOTWANE welcomes the decision of the IMF Executive Board and notes that despite considerable challenges, the country’s economy is showing remarkable resilience.
“On behalf of His Excellency the President of the Republic of Zambia Mr. HAKAINDE HICHILEMA, colleagues in the public and private sector, and other fellow citizens who have all worked hard to ensure our economic transformation journey remains on course, I am pleased that the IMF Executive Board has upheld the staff review and assessment of progress on economic and financial policies made during the staff visit to Lusaka (held from 25th October, 2023, to 8th November, 2023). Collectively, we are encouraged by the IMF’s assessment that despite considerable challenges, the Zambian economy is showing resilience evidenced by positive growth, strong fiscal performance and consolidation, and continued constructive engagement with creditors on the debt restructuring process,” states the Minister.
Dr MUSOKOTWANE reiterates that the Government remains committed to meeting the ECF programme objectives, and is calling upon fellow citizens and the international community to continue supporting the reform process.
As we continue with the IMF supported programme, some of the reform measures will be stringent but they need to be implemented now in order to create jobs for our citizens, grow the private sector, develop the nation and improve livelihoods across all regions in the shortest possible time, says the Minister.
Among other considerations, the successful IMF Executive Board review is important for the following reasons:
1) It signals the endorsement of the significance that the Government has placed on various economic transformation reforms;
2) It enhances and sustains investor confidence in our country as one of the best destinations for foreign direct investment in priority sectors such as the green economy, agriculture, mining, tourism, industrialisation through value addition, and infrastructure development through Public-Private-Partnerships (PPP’s);
3) It unlocks resources from other development partners such as the World Bank, African Development Bank, and other multilateral and bilateral partners. Recently, the Government signed agreements with France for water, sanitation and budget support. Earlier, Zambia was assured of financing by the UK Government for green energy projects driven by the private sector, and by European Union financing for health, education and food security. These milestones are importance endorsements of Zambia’s status as a preferred investment destination because development partners are mirrors through whom private sector investors get assurances of the socio-economic stability of the country; and,
4) It strengthens and paves the passage to debt restructuring exercise.
The envisaged policy thrust going forward includes continuation of fiscal consolidation, improving public financial management, increasing and safeguarding essential social spending, preserving financial stability, and intensifying structural and governance reforms to unlock Zambia's growth potential.
In conclusion, the Minister reiterates that a successful IMF Executive Board Review is an important building block in economic governance as it confirms the Government’s commitment to the economic transformation agenda; unlocks resources from developmental partners; and, continues to pave the way for the debt restructuring exercise.
Dr MUSOKOTWANE affirms, further, that as part of the programme, the IMF will continue to undertake regular assessments to check Zambia’s progress in meeting the ECF programme objectives, which broadly focuses on fiscal consolidation, increasing and safeguarding essential social spending, preserving financial stability, and intensifying structural and governance reforms to unlock Zambia's growth potential.