The International Monetary Fund (IMF) announced a significant financial boost for Zambia on Wednesday.
The organization’s executive board completed a review of Zambia’s Extended Credit Facility program and approved an immediate disbursement of roughly $569.6 million.
In addition to the disbursement, the IMF board also granted Zambia’s request for increased financial support.
The funding limit for the Extended Credit Facility program has been raised from $1.3 billion to $1.7 billion.
This additional support aims to help Zambia address the challenges posed by a severe drought, which has caused widespread crop losses and impacted power generation in the Southern African nation.
According to an IMF statement, Zambian authorities have demonstrated progress on economic and structural reforms.
The statement, delivered by IMF Deputy Managing Director Antoinette Sayeh, acknowledged Zambia’s efforts to manage the humanitarian crisis caused by the drought.
“Looking ahead,” Sayeh emphasized, “coordinated economic policies, continued efforts to achieve fiscal and debt sustainability, and consistent implementation of reforms will be crucial to mitigating the drought’s impact, maintaining macroeconomic stability, and fostering economic growth.”
Zambia, a country rich in copper resources, recently emerged from a debt default following a three-and-a-half-year debt restructuring process.
This lengthy process served as a cautionary tale for the G20’s Common Framework mechanism, designed to assist low-income countries struggling with unsustainable debt burdens.
The protracted debt negotiations have had a negative impact on Zambia, deterring investment and hindering both economic growth and local financial markets.
Zambia’s Finance Minister recently sought parliamentary approval for additional spending of 41.9 billion kwacha (approximately $1.65 billion) to address the drought and facilitate external debt repayments.
