Zambia and the International Monetary Fund (IMF) have reached a Staff-Level Agreement (SLA) on economic and financial policies that will serve as the anchor for the Extended Credit Facility (ECF) Programme for the next 12 months. The announcement was made following the first review mission for the ECF programme which took place from March 22nd to April 5th, 2023. The agreement is still subject to approval by the IMF Management and the Executive Board, which will disburse the second tranche of financing.
The ECF programme provides much-needed support for Zambia to achieve fiscal and debt sustainability, reduce poverty, and promote inclusive and sustainable growth. The agreement marks an important step in Zambia’s cooperation with the IMF and the country’s journey towards economic recovery.
During the visit, an IMF mission team for Zambia led by Ms. Allison Holland, Mission Chief for Zambia, commended Zambia for successfully implementing a number of home-grown reforms to reduce the fiscal deficit and increase social spending in 2022, alongside steps to strengthen public financial management and good governance. Key reforms include the elimination of subsidies on fuel by making pump prices cost-reflective, boosting revenue collection, improving revenue administration, and enhancing the operational independence of the Bank of Zambia.
In response to the announcement, the Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, MP, said, “The Zambia today and the Zambia of two years ago are two different countries. We have taken control of our finances and implemented crucial reforms to reign in borrowing and ensure prudent use of resources and oversight in public spending.” He expressed gratitude to the IMF and other creditors for their continued support, adding that it is essential to continue accessing IMF funding to anchor Zambia’s reform agenda and invest in development.
Zambia’s debt restructuring remains a concern, with the Minister noting that progress needs to be made before the country can reap the benefits of the successful review. However, he remained optimistic that working with the Official Creditor Committee (OCC) and other creditors, an agreement on debt restructuring could be reached soon.
The SLA between Zambia and the IMF marks a significant milestone for the country’s economic recovery. The government’s commitment to implementing crucial reforms and strengthening governance and financial stability has been recognized, and with continued support from the IMF and other creditors, Zambia is poised for sustainable growth and development.