Zambia secures IMF staff-level backing for new $1.5 billion programme

The ​International Monetary Fund (IMF) said on Friday it had ​reached a staff-level agreement with Zambia ‌on ​a new Extended Credit Facility worth about $1.5 billion.

The Southern African country's previous $1.7 billion IMF programme, which helped it emerge from a prolonged debt ‌crisis after becoming Africa's first COVID-19 pandemic-era sovereign default in 2020, expired in January. An IMF team led by Edward Gemayel that visited Lusaka from September 29 to October 9 said the proposed programme was aimed at ‌preserving macroeconomic stability, strengthening economic resilience and supporting the country's growth ambitions.

Gemayel told a press ‌conference that IMF Executive Board approval was expected around December, with disbursements to be made every six months over the facility's three-year duration. The funds will be released in seven instalments, with the first amounting to about 15% of the total, ⁠Gemayel said.

The ​agreement, which will ⁠give Zambia access to 1,076 million Special Drawing Rights, comes as the country prepares its 2027 budget, with the finance ministry ⁠saying this week that government spending is projected to rise by 7%. Zambia and the African Export-Import Bank had ​almost reached agreement on a debt restructuring, with only formalisation remaining and that there were "good faith ⁠discussions" with the Trade and Development Bank, Gemayel told Reuters.

The IMF forecast economic growth of 5.6% for Zambia in 2026, underpinned ⁠by ​strong performances in agriculture, mining and exports, but said its fiscal position had weakened due to lower-than-expected revenue collections and higher-than-budgeted spending by the Food Reserve Agency. Gemayel told Reuters that the IMF ⁠could accommodate a return to the eurobond market if Zambia's authorities chose to do so.

Zambia's 2033 ⁠eurobond gained on the ⁠news of the agreement on Friday, with bids rising to 95.82 cents on the dollar, Tradeweb data showed.