World Bank To Provide $275 Million Over Next Three Years

Finance Minister Situmbeko Musokotwane has announced that the World Bank will provide $275 million in funding to Zambia over the next three years, following the approval of an IMF supported programme by the fund’s board.

In addition, the World Bank has committed to helping Zambia recover from its multiple debt and economic crisis with a payout of some $959 million to institute reforms for inclusive growth and poverty reduction 

Of this figure, $294 million has already been committed to scaling up social cash transfers and strengthening Zambia’s Covid-19 response, including vaccination drives and emergency health financing.

The remaining $665 million will be delivered as part of three operations which are due for approval later this month. The first of these operations will be aimed at reinvigorating the agricultural sector; the second at strengthening decentralised public service delivery; and the third will finance additional social protection spending. 

Further financing over the next three years is also expected from the Africa Development Bank, following the agreement of the Country Assistance Strategy in the second half of this year.

Dr Musokotwane delivered the announcements at a press conference on Sunday. He also indicated that conversations were ongoing regarding Zambia’s debt relief deal under the G20 Common Framework for Debt Treatment.

Meanwhile, China has called on the IMF to approve its $1.4 billion bailout for Zambia. On Friday China’s Africa chief Wu Peng said the IMF should move quickly to approve the deal, adding “The Chinese side appeals for the IMF’s early approval and disbursement of the ECF [Extended Credit Facility] to Zambia.”

It follows a meeting between Mr Wu and President Hakainde Hichilema on Thursday. China is Zambia’s largest creditor, owning approximately of the country’s foreign debts. It also recently agreed to Co-Chair the IMF committee on Zambia’s debt relief.

Restructuring Zambia’s debts has been a major priority for the New Dawn government since taking office. In December 2021, it secured a staff-level agreement with the IMF and since then has indicated it expects to secure a full bailout by the end of 2022.

Tackling the debt burden will restore investor confidence, allowing more companies to invest in Zambia and create more jobs. It also frees up money in the treasury for infrastructure and social security, including roads and hospitals.