Zambia to get $388m in fresh IMF funds to deal with drought

AFRICAN BUSINESS AND ECONOMYJune 4, 2024 at 8:59 PM UTC

TLDR

Zambia set to receive $388 million boost from IMF, in addition to $3 billion debt restructuring deal with bondholders.
IMF and Zambian government reach staff-level agreement on augmenting economic program to $1.7 billion, aiding in addressing severe drought.
Approval by IMF management and board anticipated by end of June, granting Zambia immediate access to $573 million.

Zambia is poised to receive a significant boost from the International Monetary Fund (IMF), with an additional $388 million in financing expected by the end of the month, alongside the conclusion of a $3 billion debt restructuring deal with bondholders.

The IMF has reached a staff-level agreement with the Zambian government on the third review of an existing $1.3 billion economic program, which includes a request to increase it to around $1.7 billion.

This augmentation aims to assist Zambia in addressing its worst drought in at least four decades. Upon approval by the IMF's management and board, expected by the end of June, Zambia will gain immediate access to about $573 million.

Key Takeaways

Zambia, a copper-rich nation, experienced significant delays in completing the IMF review due to a severe drought that drastically impacted its harvest and hydroelectric production. The El Niño-induced dry spell led Zambia to halve its 2024 economic growth forecast to 2.5% and appeal for assistance to close a $900 million budget shortfall. The Finance Ministry has already received indicative pledges of support amounting to approximately $500 million from cooperating partners to mitigate the drought's effects. This additional support, coupled with the IMF's expected financing, will be crucial in addressing the economic challenges posed by the drought.

Zambia

IMF

Economy

Drought

El Nino

Inflation