By Jane Chanda
Ministry of Finance and National Planning (MFNP) Secretary to the Treasury Felix Nkulukusa says Zambia has reached a Staff-Level Agreement with the International Monetary Fund (IMF) on the country’s economic policies and reforms.
He stated that the agreement marked the conclusion of the fourth review of the 38-month Extended Credit Facility (ECF) arrangement, which is expected to provide Zambia with $185.5 million in financing.
In a statement today, the MFNP revealed that the agreement was reached after discussions between Zambian authorities and an IMF staff team led by Mercedes Vera Martin.
Nkulukusa stated that the team was in Zambia from October 2 to 15, 2024, and later met in Washington DC during the 2024 Annual Meetings of the IMF and World Bank Group.
According to him, the agreement was subject to IMF management approval and executive Board consideration, with a Board meeting anticipated by mid-December. The IMF has revised Zambia’s 2024 Real GDP growth projection to 1.2 percent, down from 2.3 percent in June 2024.
He stated that the Zambian government was committed to preserving social spending in the 2025 budget while maintaining fiscal consolidation.
Nkulukusa stated that this included exploring additional domestic resource mobilisation efforts, such as rationalising taxes and identifying contingent spending.
He further stated that the government also aimed to build buffers against economic and climate-related shocks, improve the tax ecosystem, and enhance public financial management reforms.
Nkulukusa stated that the government had agreed to maintain an agile monetary policy to combat inflation while preserving exchange rate flexibility. He further stated that this included promoting the use of the domestic currency in domestic transactions, developing an effective deposit insurance scheme, and reviewing the financial services framework.
Finance and National Planning minister Dr. Situmbeko Musokotwane expressed gratitude for the IMF’s continuous support, stating: “Reaching the Staff Level Agreement during a period when the country is facing serious food and energy challenges induced by the worst drought in Zambia’s history is a testimony of the confidence that the IMF and the international community has in the resilience of the citizenry.”
The minister stated that the ECF arrangement, approved on August 31, 2022, was augmented by an additional 30 percent of quota ($385.7 million) in July 2024 to preserve macroeconomic stability and support Zambia’s response to external shocks.
To date, cumulative disbursements under the ECF-supported program are approximately $1.1 billion.
“We are pleased with the progress made in the deliberations with the IMF staff team and will continue to work towards achievement of results in alignment with the expectations of citizens, other stakeholders, and the international community,” stated Dr Musokotwane.
