IMF Executive Board Approves New Extended Credit Facility (ECF) Arrangement for Zambia

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IMF Executive Board Approves New Extended Credit Facility (ECF) Arrangement for Zambia







August 31, 2022











  • IMF Executive Board Approves 38-Month SDR 978.2 Million (about $1.3 Billion) ECF Arrangement for Zambia to Help Restore Macroeconomic Stability and Foster Higher Growth, more resilient and more inclusive.
  • The authorities’ program, supported by the ECF arrangement, will advance the authorities’ domestic reform plan to restore debt sustainability, create fiscal space for much-needed social spending, and strengthen economic governance. .
  • Concluding timely restructuring agreements with external creditors will be essential for the successful implementation of the new ECF arrangement.





Washington D.C.:
The Executive Board of the International Monetary Fund (IMF) has approved a 38-month arrangement under the Extended Credit Facility (ECF) for an amount equivalent to SDR 978.2 million (approximately US$1.3 billion, i.e. 100% of the quota). The program builds on the authorities’ economic reform plan, which aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.

Zambia faces the legacy of years of economic mismanagement, with a particularly ineffective public investment drive. Growth has been too weak to reduce rates of poverty, inequality and malnutrition, which are among the highest in the world. Zambia is over-indebted and needs a thorough and comprehensive debt treatment to put public debt on a sustainable path.

The ECF-supported program will help restore sustainability through fiscal adjustment and debt restructuring, create fiscal space for social spending to cushion the adjustment burden, and strengthen economic governance , in particular by improving the management of public finances. The program will also catalyze much-needed financial support from development partners. The Executive Board’s decision will allow an immediate disbursement equivalent to SDR 139.88 million (about US$185 million).

Following the Board discussion on Zambia, Ms. Kristalina Georgieva, Chief Executive Officer, made the following statement:

“Zambia continues to face profound challenges reflected in high levels of poverty and low growth. The ECF-supported program aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.

“Restoring fiscal sustainability will require sustained fiscal adjustment. The authorities’ adjustment plans rightly focus on eliminating regressive fuel subsidies, improving the efficiency of the agricultural subsidy program and reducing inefficient public investments. Domestic revenue mobilization should also support medium-term adjustment. The adjustment creates fiscal space for increased social spending to cushion the burden of the most vulnerable, help reduce poverty and invest in the people of Zambia. The ongoing expansion of the authorities’ social cash transfer program and their plans to increase public spending on health and education are particularly welcome. Along with fiscal adjustment, Zambia needs a thorough and comprehensive debt treatment within the common G20 framework to restore debt sustainability.

“A substantial strengthening of fiscal controls is needed to support fiscal adjustment, as well as to address governance and corruption vulnerabilities. Public investment management and procurement practices need to be strengthened to ensure transparency and efficient use of scarce resources. It will also be important to strengthen the framework for monitoring fiscal risks, especially those related to large public enterprises.

“The Bank of Zambia should continue its efforts to reduce inflation and preserve financial stability. International reserves should be replenished when conditions permit and the exchange rate should continue to reflect market conditions. It will also be important to address high NPL levels and ensure adequate capital buffers. »


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Nico Mombrial

Call: +1 202 623-7100E-mail: [email protected]

@IMF Spokesperson






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