The International Monetary Fund (IMF) has officially approved the final review of Zambia’s current lending arrangement. This sixth and final credit facility marks a significant milestone for the Southern African nation, unlocking $190 million in immediate financing.
Initially, Lusaka sought a $1.3 billion financing package from the IMF in 2022. That figure was later revised upward to $1.7 billion to provide a more robust buffer against debt default and persistent economic challenges.
Shift Toward Domestic Financial Independence
While Zambia had previously considered a $145 million loan extension, the government ultimately withdrew that request. Instead, the nation is pivoting toward a strategy of self-reliance to address its remaining financial needs.
The government’s strategy for closing financial gaps includes:
- Domestic Revenues: Strengthening internal tax collection and state income.
- Local Markets: Utilizing domestic financial markets for stability.
- Strategic Partnerships: Collaborating with other development partners beyond the IMF.
Economic Outlook and Election Pressures
Zambia currently faces double-digit inflation, which remains a central concern as the country prepares for general elections this August. Despite these immediate pressures, the government’s forecast for the coming year is notably optimistic.
Projected targets for 2026 include:
- Deficit Reduction: A projected drop in the budget deficit by more than 50 percent.
- Accelerated Growth: Expectations that economic growth will exceed 6 percent.
- Board Approval: The formal completion of the sixth review under the Extended Credit Facility (ECF) is expected to be finalized by the IMF board by the end of this month.
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