{
  "title": "Zambia: IMF Executive Board Completes Third Review Under the Extended Credit Facility and Approves Augmentation of the Arrangement",
  "publication": "IMF News, June 26, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/06/26/pr-24242-zambia-imf-completes-3rd-review-under-ecf-and-approves-augmentation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) completed today the third review of Zambia’s 38-month Extended Credit Facility (ECF) Arrangement and approved an augmentation of SDR 293.46 million (about US$385.7 million).",
  "publishDate": "2024-06-26",
  "sections": [
    {
      "heading": "Program approval and augmentation",
      "content": "- The Executive Board completed the third review of Zambia’s 38-month Extended Credit Facility (ECF) Arrangement.\n- Approved augmentation of SDR 293.46 million (about US$385.7 million).\n- Completion of the review allows for an immediate disbursement of SDR 433.34 million (about US$569.6 million).\n- Total disbursement so far under the ECF-supported program: SDR 852.98 million (about US$1.1 billion).\n- Original ECF Arrangement approved on August 31, 2022, for SDR 978.2 million (100 percent of quota, or about US$1.3 billion).\n- Augmentation increases access to SDR 1271.66 million (130 percent of quota, about US$1.7 billion)."
    },
    {
      "heading": "Program performance and structural reforms",
      "content": "- Program performance described as satisfactory.\n- All quantitative performance criteria for the third review were met.\n- All but one structural conditionality were completed.\n- All continuous and end-December 2023 structural benchmarks were completed on time.\n- All but one end-March 2024 structural benchmark were completed on time.\n- Authorities committed to advancing structural and governance reforms to promote inclusive growth and improve livelihoods."
    },
    {
      "heading": "Macroeconomic outlook and drought impact",
      "content": "- Zambia is grappling with a severe drought that has significantly impacted agriculture and electricity generation, affecting a substantial share of the population.\n- Growth projection for 2024 revised down to 2.3 percent, from 4.7 percent.\n- The 2024 budget has been revised to accommodate the drought’s impact.\n- Authorities remain committed to:\n  - supporting macroeconomic stability,\n  - restoring fiscal and debt sustainability,\n  - clearing arrears,\n  - addressing humanitarian needs related to the drought."
    },
    {
      "heading": "Debt restructuring and creditor engagement",
      "content": "- Implementing the October 2023 Memorandum of Understanding with the Official Creditor Committee (OCC) through bilateral agreements is underway.\n- Restructuring agreement with Eurobond holders reached on March 25, 2024, in line with IMF program parameters; OCC confirmed comparability of treatment among creditors.\n- Consent solicitation launched on May 13; bond exchange settled on June 11, 2024.\n- Zambia continues to engage with other commercial private creditors, aiming for an agreement by year-end."
    },
    {
      "heading": "Key policy recommendations and priorities (from Ms. Antoinette Sayeh)",
      "content": "- Continue coordinated macroeconomic policies to address drought impact, preserve macroeconomic stability, and bolster growth.\n- Adhere to committed fiscal consolidation over the program period to ensure fiscal sustainability.\n- Given significant spending reprioritization in 2024, focus on revenue mobilization, including:\n  - enhancing tax administration,\n  - broadening the tax base.\n- Implement public financial management reforms to enhance spending controls, budget execution, and fiscal accountability.\n- Make greater progress in budgetary arrears clearance.\n- Complete debt treatment with remaining private creditors on comparable terms and in line with program parameters to make debt sustainable on a forward-looking basis.\n- Maintain a tight monetary stance until inflation declines toward the Bank of Zambia’s target range to help anchor inflation expectations.\n- Prioritize reserve accumulation and sustained exchange rate flexibility to address external shocks.\n- Advance financial sector reforms to foster financial stability and inclusion.\n- Strengthen governance and structural reforms to promote private sector activity and economic diversification, including:\n  - Implementing the Access-to-Information Act,\n  - Reviewing the Anti-Corruption Act in a timely manner,\n  - Enhancing transparency and governance in the energy and mining sectors.\n- Support climate adaptation and climate-resilient energy sources; drafting of the Climate Change Bill is welcome."
    },
    {
      "heading": "Selected economic indicators, 2022–26 (as published)",
      "content": "- Population (millions, 2022): 20.0\n- Per capita GDP ($, 2022): 1,455\n- Quota (SDR millions): 978.2\n- Poverty rate (2022): 60\n- Main products and exports: Copper\n- Key export markets: China\n\n- Real GDP growth (%):\n  - 2021: 6.2\n  - 2022: 5.2\n  - 2023 Est.: 5.4\n  - 2024 Proj.: 2.3\n  - 2025 Proj.: 6.6\n  - 2026 Proj.: 5.9\n\n- Inflation annual average (%):\n  - 2021: 22.0\n  - 2022: 11.0\n  - 2023 Est.: 10.9\n  - 2024 Proj.: 14.6\n  - 2025 Proj.: 12.1\n  - 2026 Proj.: 7.0\n\n- Inflation end-of-year (%):\n  - 2021: 16.4\n  - 2022: 9.9\n  - 2023 Est.: 13.1\n  - 2024 Proj.: 15.0\n  - 2025 Proj.: 7.9\n\n- Central government finances (% GDP):\n  - Revenue:\n    - 2021: 22.4\n    - 2022: 20.4\n    - 2023 Est.: 21.5\n    - 2024 Proj.: 21.4\n    - 2025 Proj.: 21.8\n  - Expenditure:\n    - 2021: 30.5\n    - 2022: 28.2\n    - 2023 Est.: 27.9\n    - 2024 Proj.: 27.5\n    - 2025 Proj.: 24.6\n    - 2026 Proj.: 25.1\n  - Fiscal balance (cash basis, % GDP):\n    - 2021: -8.1\n    - 2022: -7.8\n    - 2023 Est.: -6.5\n    - 2024 Proj.: -6.1\n    - 2025 Proj.: -2.8\n    - 2026 Proj.: -3.4\n  - Fiscal balance (commitment basis, % GDP):\n    - 2021: -13.9\n    - 2022: -5.4\n    - 2023 Est.: -5.6\n    - 2024 Proj.: -2.5\n    - 2025 Proj.: -1.6\n    - 2026 Proj.: -2.3\n  - Public debt (% GDP):\n    - 2021: 112.1\n    - 2022: 110.9\n    - 2023 Est.: 133.4\n    - 2024 Proj.: 107.5\n    - 2025 Proj.: 88.5\n    - 2026 Proj.: 79.2\n\n- Money and Credit:\n  - Broad money (% change):\n    - 2021: 3.7\n    - 2022: 24.5\n    - 2023 Est.: 10.5\n    - 2024 Proj.: 13.2\n    - 2025 Proj.: 10.4\n  - Credit to private sector (% change):\n    - 2021: 34.2\n    - 2022: 41.3\n    - 2023 Est.: 23.6\n    - 2024 Proj.: 29.0\n    - 2025 Proj.: 15.6\n  - 3-month Treasury bill interest rate (%):\n    - 2021: 12.8\n    - 2022: 9.6\n\n- Balance of payments:\n  - Current account (% GDP):\n    - 2021: 11.9\n    - 2022: 3.8\n    - 2023 Est.: -1.9\n    - 2024 Proj.: -0.2\n    - 2025 Proj.: 6.9\n    - 2026 Proj.: 5.7\n  - FDI (% GDP):\n    - 2021: 3.1\n    - 2022: 0.6\n    - 2023 Est.: -0.1\n    - 2024 Proj.: 4.5\n  - Reserves (in months of imports):\n    - 2021: 3.3\n    - 2022: 3.4\n    - 2023 Est.: 3.6\n    - 2024 Proj.: 4.3\n    - 2025 Proj.: 5.0\n\n- Exchange rate:\n  - REER (% change):\n    - 2021: 30.3\n    - 2022: -7.3\n\nIMF Press Release No. 24/242, June 26, 2024.\n\n---\n\n\n References\n\n- PRESS CENTER\n- Extended Credit Facility\n- ECF Arrangement\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/06/26/pr-24242-zambia-imf-completes-3rd-review-under-ecf-and-approves-augmentation"
    }
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    "Published: June 26, 2024",
    "The Executive Board completed the third review of Zambia’s 38-month Extended Credit Facility (ECF) Arrangement.",
    "Approved augmentation of SDR 293.46 million (about US$385.7 million).",
    "Completion of the review allows for an immediate disbursement of SDR 433.34 million (about US$569.6 million).",
    "Total disbursement so far under the ECF-supported program: SDR 852.98 million (about US$1.1 billion).",
    "Original ECF Arrangement approved on August 31, 2022, for SDR 978.2 million (100 percent of quota, or about US$1.3 billion).",
    "Augmentation increases access to SDR 1271.66 million (130 percent of quota, about US$1.7 billion).",
    "Program performance described as satisfactory.",
    "All quantitative performance criteria for the third review were met.",
    "All but one structural conditionality were completed.",
    "All continuous and end-December 2023 structural benchmarks were completed on time.",
    "All but one end-March 2024 structural benchmark were completed on time.",
    "Authorities committed to advancing structural and governance reforms to promote inclusive growth and improve livelihoods.",
    "Zambia is grappling with a severe drought that has significantly impacted agriculture and electricity generation, affecting a substantial share of the population.",
    "Growth projection for 2024 revised down to 2.3 percent, from 4.7 percent.",
    "The 2024 budget has been revised to accommodate the drought’s impact.",
    "Authorities remain committed to:",
    "Implementing the October 2023 Memorandum of Understanding with the Official Creditor Committee (OCC) through bilateral agreements is underway.",
    "Restructuring agreement with Eurobond holders reached on March 25, 2024, in line with IMF program parameters; OCC confirmed comparability of treatment among creditors.",
    "Consent solicitation launched on May 13; bond exchange settled on June 11, 2024.",
    "Zambia continues to engage with other commercial private creditors, aiming for an agreement by year-end.",
    "Continue coordinated macroeconomic policies to address drought impact, preserve macroeconomic stability, and bolster growth.",
    "Adhere to committed fiscal consolidation over the program period to ensure fiscal sustainability.",
    "Given significant spending reprioritization in 2024, focus on revenue mobilization, including:",
    "Implement public financial management reforms to enhance spending controls, budget execution, and fiscal accountability.",
    "Make greater progress in budgetary arrears clearance.",
    "Complete debt treatment with remaining private creditors on comparable terms and in line with program parameters to make debt sustainable on a forward-looking basis.",
    "Maintain a tight monetary stance until inflation declines toward the Bank of Zambia’s target range to help anchor inflation expectations.",
    "Prioritize reserve accumulation and sustained exchange rate flexibility to address external shocks.",
    "Advance financial sector reforms to foster financial stability and inclusion.",
    "Strengthen governance and structural reforms to promote private sector activity and economic diversification, including:",
    "Support climate adaptation and climate-resilient energy sources; drafting of the Climate Change Bill is welcome.",
    "Population (millions, 2022): 20.0",
    "Per capita GDP ($, 2022): 1,455",
    "Quota (SDR millions): 978.2",
    "Poverty rate (2022): 60",
    "Main products and exports: Copper",
    "Key export markets: China",
    "Real GDP growth (%):",
    "Inflation annual average (%):",
    "Inflation end-of-year (%):",
    "Central government finances (% GDP):",
    "Money and Credit:",
    "Balance of payments:",
    "Exchange rate:",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Extended Credit Facility](https://www.imf.org/en/About/Factsheets/Sheets/2023/Extended-Credit-Facility-ECF)",
    "[ECF Arrangement](https://www.imf.org/en/News/Articles/2022/08/31/pr22297-imf-executive-board-approves-new-extended-credit-facility-arrangement-for-zambia)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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