IMF approves $570m Zambia payout, increases loan to $1.7bn

AFRICAN BUSINESS AND ECONOMYJune 27, 2024 at 4:15 PM UTC

TLDR

IMF completes third review of Zambia's Extended Credit Facility, approves $569.6 million disbursement.
Fund increases financial support to $1.7 billion to aid Zambia's response to severe drought impact.
Zambian authorities show progress in economic and structural reforms amidst humanitarian challenges from drought.

The International Monetary Fund (IMF) said this week its executive board had completed a third review of Zambia’s Extended Credit Facility and approved an immediate disbursement of some $569.6 million.

The Fund’s board also approved a request to increase its financial support from $1.3 billion to $1.7 billion to help the southern African country respond to a severe drought, which has caused crop losses and affected power generation.

In a statement, IMF official Antoinette Sayeh said Zambian authorities had made progress on economic and structural reforms while addressing humanitarian challenges due to the drought.

Key Takeaways

Copper-rich Zambia emerged from default this month following a debt-restructuring process that lasted over three and a half years, serving as a cautionary tale for the G20’s Common Framework mechanism, which aims to assist low-income countries in managing unsustainable debt burdens. The prolonged debt rework has deterred investment, constrained economic growth, and negatively impacted local financial markets. Last week, Zambia’s finance minister requested parliamentary approval for additional spending of 41.9 billion kwacha ($1.65 billion) to help repay external debt and address the drought.

Zambia

IMF

International Monetary Fund

Economy

Southern Africa

Drought