Government To Commence Discussions For IMF Extended Credit Facility

Representatives from the Ministry of Finance, led by Minister Situmbeko Musokotwane, will today begin discussions with the International Monetary Fund over the potential extended credit facility for Zambia. 

In a statement to the media, Treasury Secretary Felix Nkulukusa said the aim of the discussions was to outline an agreed policy reform package, as well as a medium-term macro-fiscal framework and debt restructuring package. This would hopefully restore Zambia’s fiscal sustainability, boost growth and strengthen the country’s economic governance. 

Nkulukusa said the new UPND administration, under President Hakainde Hichilema, was committed to fostering Zambia’s economic recovery and restoring debt sustainability. 

An IMF extended credit facility has long been viewed as essential for reviving Zambia’s economy and stimulating growth. Under the previous Patriotic Front administration, the IMF had been unwilling to offer a deal because of President Lungu’s unmitigated borrowing habits. In 2018, the IMF withdrew its representative from the country following a dispute with the Lungu government. 

After ten years of Patriotic Front rule, Zambia’s external debts are now estimated to be in excess of $14 billion, with much of this owed to Chinese state entities. 

Upon his election in August, President Hakainde Hichilema pledged to restore Zambia’s finances after finding the treasury ‘emptied’ by the previous administration. During the budget presentation last Friday, Hichilema’s government pledged to cut the deficit to no more than 6.7% of GDP in 2022, and not to contract any more foreign debts except for the purpose of refinancing. 

In his presentation, Finance Minister Situmbeko Musokotwane identified a deal with the IMF as absolutely critical to Zambia’s economic future and pledged to reach an agreement by the end of November.