Zambia whose economy has been on its knees after defaulting on its foreign debts in 2020, will be able to stand and walk again to rebuild.
On Wednesday, Zambia won International Monetary Fund approval for a $1.3 billion, 38-month loan program.
Covid-19 pandemic badly battered Zambia’s economy but this bail out package from the IMF is a crucial step in the country’s quest to restructure its debts and rebuild an economy also ravaged by mismanagement.
The IMF said in a statement that the new Extended Credit Facility arrangement would provide total funding of 978.2 million Special Drawing Rights – about $1.3 billion at current exchange rates – equivalent to 100% of Zambia’s Fund quota, or shareholding.
President Hakainde Hichilema said, “The IMF deal we have secured was done without paying anyone ka ‘samfing’ for consultancy. We provided strong leadership for Zambian experts to deliver and commend the entire team involved in this homegrown programme.”
IMF Managing Director Kristalina Georgieva said on Wednesday, “Zambia continues to face profound challenges reflected in high poverty levels and low growth.”
“The ECF-supported program aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.”
Georgieva said this would require “sustained” spending reductions and that Zambian authorities were appropriately focused on eliminating “regressive” fuel subsidies, reforming agricultural subsidies, reducing inefficient public investments and increasing tax revenues. This will free up some fiscal space to increase social spending to ease transition burdens on the most vulnerable, she said.