Talks With IMF Fail Again

The government has once again failed to agree on terms for an economic reform programme with the International Monetary Fund (IMF), meaning that Zambia will not be able to access much-needed financial assistance to help alleviate its debt burden.  

In separate statements issued on Monday evening, both the IMF and the Ministry of Finance acknowledged that a deal for implementing an Extended Credit Facility (ECF) had not been achieved but that talks would continue at a later date.

In its statement, the IMF said there had been “broad agreement on the macroeconomic framework” and that it was looking forward to continuing ECF discussions once “key measures are taken”.

The Ministry of Finance similarly said that talks would resume “at the appropriate time”, likely scuppering plans for a deal to be struck before Zambia’s general election in August.  

Talks around a deal have been ongoing for more than five years, with the government rejecting an initial proposal in 2015, before returning to the negotiating table. 

The major stumbling block is concerns around Zambia’s debt sustainability, with the IMF warning in 2018 that discussions could only progress once the government implemented credible measures to manage the country’s growing debt burden.

Since then Zambia’s debt has ballooned under the PF government, topping out at over $20 billion this year. In 2020 Zambia was one of the few African countries not to receive financial relief for the coronavirus pandemic because of its unstable debt situation, as well as a poor relationship with the PF regime. 

Having rejected a deal with the Fund in 2015, President Lungu challenged them to leave the country in 2017 if they felt he had gone beyond the norms of good governance and democracy after he declared a state of emergency. The fund subsequently withdrew its representative to Zambia in August 2018.