KEY POINTS
- IMF offers $185.5 million for Zambia’s recovery.
- Drought, inflation reduce Zambia’s GDP growth forecast.
- IMF emphasizes fiscal reforms for economic stability.
Zambia and the IMF reached a staff-level agreement on the fourth review of Zambia’s loan program, with $185.5 million potentially disbursed pending board approval.
The funds, part of Zambia’s $1.3 billion Extended Credit Facility, aim to support the country’s economic recovery. This follows an IMF mission to Zambia and discussions during the IMF and World Bank annual meetings in Washington.
Drought, inflation challenge Zambia’s economy
Zambia’s economy faces mounting pressures from an extended drought that has reduced agricultural production and led to electricity shortages, affecting key sectors.
The IMF now projects Zambia’s 2024 real GDP growth at 1.2 percent, down from a previous 2.3 percent forecast issued in June. October’s inflation rose sharply to 15.7 percent, driven by rising food prices and a depreciating currency, placing inflation well above the 6-8 percent target band set by the Zambian government.
Focus on stabilization and reform
The IMF’s financial support is intended to aid Zambia’s reform agenda, which targets improved fiscal management and debt reduction.
The Fund underscored the importance of structural reforms to address inflation and stabilize the currency, necessary steps for strengthening Zambia’s economy in the face of ongoing fiscal challenges. If the $185.5 million installment is approved, it will signal continued support from the IMF for Zambia’s efforts to achieve sustainable growth.
