The International Monetary Fund (IMF) has announced a $574 million financial assistance package to support Zambia, a nation facing severe drought conditions.
This “staff-level agreement” comes after a review of a $1.3 billion loan granted in 2022 and requires final approval by the IMF’s executive board.
The drought has significantly impacted Zambia’s economic outlook.
Vera Martin, the IMF’s mission chief for Zambia, stated that GDP growth projections for 2024 have been halved to 2.3% due to the drought’s devastation on crops.
This prompted Zambia to request an increase in the loan amount to $1.7 billion.
Upon approval, the agreement will provide Zambia with immediate access to approximately $574 million.
This financial assistance is crucial as the UN food agency previously warned that the El Nino-induced drought has pushed millions towards starvation.
The IMF highlighted that Zambia has committed to targeting emergency relief to its most vulnerable citizens while maintaining fiscal consolidation efforts to ensure long-term debt sustainability.
Zambia’s Finance Minister, Situmbeko Musokotwane, praised the agreement, viewing it as a recognition of the government’s economic reform efforts.
This IMF aid package comes at a critical time for Zambia, a nation still grappling with the aftermath of a 2020 debt default of around $18 billion, exacerbated by the COVID-19 pandemic.
However, Zambia recently secured a long-awaited debt restructuring deal with creditors, offering a glimmer of hope for economic recovery.
