LUSAKA, Oct 9 – The International Monetary Fund (IMF) has reached a staff-level agreement with Zambia on a proposed $1.5 billion Extended Credit Facility (ECF), opening the way for a new three-year financing programme aimed at preserving macroeconomic stability and supporting economic growth.
The agreement followed discussions between Zambian authorities and an IMF mission led by Edward Gemayel, which visited Lusaka from September 29 to October 9. The proposed facility would provide Zambia with access to 1.076 billion Special Drawing Rights (SDRs).
Gemayel said the IMF Executive Board was expected to consider the programme around December, with disbursements scheduled every six months over the facility’s three-year term.
The proposed arrangement comes as Zambia prepares its 2027 national budget. The Finance Ministry said this week that government spending is projected to increase by 7%, placing the financing agreement within a broader effort to manage public expenditure and maintain economic stability.
New Programme Follows Previous IMF Facility
The proposed agreement follows the expiration in January of Zambia’s previous $1.7 billion IMF programme, which supported the country’s recovery from a prolonged debt crisis.
Zambia became the first African country to default on its sovereign debt during the COVID-19 pandemic era in 2020. The previous programme formed part of efforts to restore debt sustainability and stabilise the economy following the default.
The new facility is intended to preserve macroeconomic stability, strengthen resilience to economic shocks and support Zambia’s longer-term growth ambitions.
Growth Outlook and Fiscal Pressures
The IMF forecasts Zambia’s economy will expand by 5.6% in 2026, supported by stronger performance in agriculture, mining and exports.
However, the Fund also highlighted pressures on the government’s fiscal position, citing revenue collections below expectations and spending by the Food Reserve Agency that exceeded budgeted levels.
These pressures present a challenge as authorities seek to balance development spending with fiscal discipline and sustainable debt management.
Zambia’s international bond market responded positively to news of the agreement. The country’s 2033 Eurobond rose to 95.82 cents on the dollar, according to Tradeweb data, indicating improved investor sentiment following the announcement.
The staff-level agreement remains subject to approval by the IMF Executive Board before the proposed financing can be formally implemented.
