IMF Board Approves New Extended Credit Facility for Zambia

The International Monetary Board (IMF) Board has approved SDR 978.2 million (about $1.3 billion) 38-month ECF arrangement for Zambia to help restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.

In a statement on Thursday, IMF said the ECF-arrangement, will advance the country’s homegrown reform plan to restore debt sustainability, create fiscal space for much-needed social spending, and strengthen economic governance.

It will also help to secure timely restructuring agreements with external creditors will be essential for the successful implementation of the new ECF arrangement.

Zambia is dealing with the legacy of years of economic mismanagement, with an especially inefficient public investment drive. Growth has been too low to reduce rates of poverty, inequality, and malnutrition that are amongst the highest in the world. It is also in debt distress and needs a deep and comprehensive debt treatment to place public debt on a sustainable path.

Ms Kristalina Georgieva, IMF’s Managing Director, said: “Zambia continues to face profound challenges reflected in high poverty levels and low growth. The ECF-supported program aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.

“The ongoing expansion of the authorities’ Social Cash Transfer program and their plans to increase public spending on health and education are particularly welcome. Together with the fiscal adjustment, Zambia needs a deep and comprehensive debt treatment under the G20 Common Framework to restore debt sustainability.”

She also added that Zambia’s public investment management and procurement practices need to be strengthened to ensure transparency and the efficient use of scarce resources.

This she says will be important to bolster the framework for monitoring fiscal risks, particularly those related to large state-owned enterprises.

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