38-month arrangement based on Zambia’s ‘homegrown economic reform plan’ to restore macroeconomic stability, foster growth
The IMF has approved Zambia’s request for a $1.3 billion program to rejig the Southern African country’s debt-stricken economy worsened by mismanagement and COVID-19 pandemic.
The 38-month arrangement under the extended credit facility is based on Zambia’s “homegrown economic reform plan that aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth,” the Washington-based lender said in a statement on Wednesday.
The program will also “catalyze much needed financial support from development partners,” enabling further disbursement of $185 million, the fund said.
In a tweet, IMF managing director Kristalina Georgieva congratulated Zambian President Hakainde Hichilema, saying “we are proud to support Zambia’s homegrown reforms and actions to help build a better future for all Zambians.”
President Hichilema in a statement said the development was a vote of confidence in his government and the people of Zambia.
“Today’s announcement will culminate in jobs for our people, a more affordable cost of living and enhanced development prospects for every province in our country. The international community has recognised the progress we have made and our commitment to reviving our economy and becoming a responsible member of the family of nations,” he said.
The program has been secured with just over a year since Hichilema’s election on the backdrop of a campaign to restore the country’s economy stricken by an external debt stock of $17.3 billion by the end of 2021. Inflation, meanwhile, has now slowed from 24% in 2021 to 9.8% in August.
The staff level agreement for the deal was reached last December. Zambia applied to restructure its debt obligations under the G20’s Common Framework guidelines, and the quest was backed by France and China, among others.
Hichilema and his Finance and National Planning Minister Situmbeko Musokotwane attribute the unsustainable debt to excessive borrowing and corruption by the erstwhile Edgar Lungu regime.