US$185.5 Million IMF Staff-Level Agreement Reached

Government and the International Monetary Fund (IMF) have reached a staff-level agreement to release US$185.5 million to Zambia, pending approval from management and the executive board. The update comes following an IMF mission to the country between October 2nd and 15th, led by Mercedes Vera Martin, in addition to subsequent meetings in Washington. 

The IMF noted the severe impact of the drought in terms of agricultural output and electricity shortages. Commenting on the government’s response it noted, “The authorities mobilized emergency relief to the most vulnerable population while maintaining fiscal consolidation to restore debt sustainability.”

“Going forward, mobilizing revenues and stepping up structural and governance reforms will help Zambia unlock growth and safeguard hard-gained progress,” a statement released by the IMF read.

Following discussions Ms Vera Martin set out the challenging outlook for 2024 but noted that the medium-term outlook remained favourable. “Growth in 2025 is projected at 6.2 percent (revised from 6.6 percent) as electricity output is not expected to fully recover. This outlook is bolstered by a recovery in agricultural and mining production and the completion of the debt restructuring and is underpinned by prudent policies and ongoing reforms. Inflation is expected to converge to the target band by end-2025, given strong base effects. The external position is projected to strengthen on account of higher exports and FDI, supporting reserve accumulation,” Ms Martin stated.