(Ecofin Agency) – In June 2024, Zambia benefited from an increase of $1.7 billion under the FEC, in order to support the economy and strengthen debt sustainability. According to the IMF, growth is expected to reach 1.2% in 2024, despite the drought, while public debt is judged “sustainable”.
The IMF Executive Board approved an immediate disbursement of $184 million to Zambia, after completing the fourth review of the Extended Credit Facility (ECF) arrangement and the review of financing assurances . This is indicated in a press release from the institution published on Monday December 16, 2024.
According to the Fund, the results of the program remain overall « satisfactory », despite difficult national and international challenges. “The results of the program remain satisfactory, with the authorities remaining committed to stabilizing the economy and advancing structural and governance reforms, despite the serious consequences of the drought,” said Nigel Clarke (photo), deputy managing director of the IMF.
Zambia’s economic activity is experiencing difficulties marked by a historic drought which has reduced agricultural production. Growth is expected to decline to 1.2% in 2024 compared to 2.3% forecast in the third review. Inflation is rising due to rising food prices and depreciation of the local currency.
The country is also in the process of restructuring its public debt. On Sunday, December 8, Zambia and France signed a bilateral agreement on debt restructuring, a few months after the conclusion of a new preliminary agreement with the holders of its Eurobonds on the restructuring of more than 3 billion $. Today, the IMF estimates that although the country’s public debt is judged “sustainable”, it remains highly exposed to a high risk of over-indebtedness.
The Zambian authorities remain committed to maintaining macroeconomic stability and restoring fiscal and debt sustainability, while supporting vulnerable households,” the Fund said. To this end, the FEC aims to support the country’s eighth national development plan by focusing on several priorities, including the consolidation of macroeconomic stability, the sustainability of debt and public finances, the strengthening of public governance. , as well as promoting inclusive growth to improve the livelihoods of the population.
Note that this financing brings the IMF disbursement to Zambia under the ECF program to $1.3 billion.
Lydie Mobio (Intern)
