By Cecilia Chiluba/Zambia/Lusaka
International Monetary Fund (IMF) Executive Board has completed the sixth and final review of Zambia’s 38-month Extended Credit Facility (ECF) Arrangement, which was approved on August 31, 2022.
The completion of the review paves the way for an immediate disbursement of SDR 138.9 million, equivalent to about US$190 million. This brings Zambia’s total disbursement under the ECF-supported programme to approximately US$1.7 billion.
According to the IMF, programme performance has been broadly satisfactory, despite some delays in meeting structural conditionality.
The Fund observed that Zambia’s economic outlook remains positive, with real Gross Domestic Product (GDP) growth projected at 5.2 percent in 2025, underpinned by strong mining activity and record-high maize production.
“Real GDP growth in 2026 is projected at 5.8 percent on the back of continued recovery in electricity generation and strong performance in mining and services.”
Inflation is projected to move gradually toward the 6–8 percent target band by 2027.
“Notwithstanding heightened global uncertainty, the medium-term outlook remains favorable and hinges on scaling up mining investment, robust agriculture production, improved electricity generation, and sustained fiscal discipline,” the Fund said.
The IMF urged Zambia to continue promoting private sector participation, economic diversification, and more inclusive growth.
In a statement issued following the Executive Board discussion on Zambia, IMF Deputy Managing Director and Acting Chair Nigel Clarke noted that Zambia’s public debt is assessed as sustainable, but remains at high risk of overall and external debt distress.
Mr. Clarke said external debt restructuring continues to advance, with five bilateral agreements signed with official creditors, while progress with commercial creditors is also advancing.
“Provided that the authorities maintain the projected fiscal consolidation path, Zambia is expected to reach a moderate risk of external debt distress over the medium term,” he added.
He further stated that despite external and domestic shocks, Zambia has significantly reduced macroeconomic imbalances, made considerable progress on debt restructuring, and undertaken sustained fiscal consolidation while safeguarding social spending.
“The performance under the program has been broadly satisfactory and the authorities should remain focused on maintaining prudent macroeconomic policies and advancing reforms to foster inclusive and private-sector-led growth. Continued engagement with the Fund and development partners would support these policy endeavors.”
“Fiscal performance in 2025 remained strong. Fiscal consolidation driven by revenue mobilization remains essential to consolidate macroeconomic gains, while protecting social spending, and create fiscal space to meet development needs,” Mr. Clarke stated.
He also urged the authorities to strengthen revenue mobilization and enhance public financial management, emphasizing that prudent borrowing and further progress on debt restructuring are necessary to ensure debt sustainability.
“Careful monetary policy calibration to gradually bring inflation toward the target band will be key to anchoring inflation expectations and preserving price stability.”
“Rebuilding reserves buffers and sustaining exchange rate flexibility are important to enhance resilience to external shocks. The review of the Banking and Financial Services Act and the adoption of the deposit insurance scheme are welcome steps to strengthen financial stability,” he stressed.
