The IMF Board approved a new Extended Credit Facility (ECF) arrangement for Zambia today, Wednesday August 31st, 2022. The $1.3 billion 38-month program is based on Zambia homegrown economic reform plan and will help restore macroeconomic stability and foster higher, more resilient, and more inclusive growth in the country by addressing Zambia’s most pressing macroeconomic challenges, namely; restoring sustainability through fiscal adjustment and debt restructuring, creating room in the budget for much-needed social spending, and strengthening governance and reducing the risk of corruption, including by improving public financial management.
“Zambia is in a debt crisis. Economic growth has been weak, and the number of Zambians living in poverty has increased. But positive changes are happening. Zambia’s government is taking bold and decisive actions to get its economy back on track, and the IMF stands with them. The IMF Executive Board has approved a three year 1.3 billion US dollar program to support the government’s reform efforts under this program to help bring public debt back under control, Zambia’s government aims to cut wasteful spending or spending that doesn’t help the poor, such as fuel subsidies. At the same time, it will increase tax revenues that can go toward development. Spending on education and health care will go up, and more of Zambia’s most vulnerable people will get money through the social cash transfer program. It’s also crucial that the government spends every kwacha well. New laws and regulations around government purchasing and more transparency in spending will promote accountability and let Zambians see how their taxes are being spent. However, Zambia also needs a deep debt restructuring. That’s where the G20 initiative to restructure debt comes in. Official creditors have already agreed to help reduce Zambia’s debt. There is a long road to recovery, but with the backing of the international community, Zambia can get back on track and create a thriving economy that works for every Zambian. We are proud to partner with Zambia on this journey,” said Allison Holland, Zambia’s Mission Chief at the IMF.
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