IMF Reaches Staff-Level Agreement on a New Extended Credit Facility Arrangement with Zambia

IMF News, October 9, 2026

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IMF staff and the Zambian authorities have reached a staff-level agreement on a package of economic policies and reforms that could support a new 36-month arrangement under the Extended Credit Facility (ECF). The agreement is subject to approval by the IMF Executive Board and contingent on the implementation of agreed prior actions.
The proposed arrangement would have access of 1,472 million USD (SDR 1,076 million) and "would support Zambia's efforts to safeguard macroeconomic stability and debt sustainability, rebuild fiscal and external buffers, and advance stronger, more inclusive, private-sector-led growth." (IMF staff statement)

Real GDP is projected to grow by 5.6 percent in 2026, "supported by strong agricultural production, mining activity, and exports." (IMF staff statement)
Inflation declined to 6.1 percent in September and is within the Bank of Zambia’s (BOZ) target range.
Gross international reserves reached US$6.1 billion in September.
The fiscal position weakened in 2026 due to revenue underperformance (weaker-than-projected VAT collections and lower fuel taxes) and substantially higher-than-budgeted spending by the Food Reserve Agency (FRA), "weakening the primary fiscal balance relative to the strong outturn recorded in 2025." (IMF staff statement)

The new program will be anchored by a "growth-oriented, revenue-led fiscal strategy to rebuild fiscal buffers and safeguard debt sustainability."
Fiscal targets and measures:
- Beginning in 2027, the authorities will gradually increase the primary surplus to 3 percent of GDP by 2029 through:
- stronger domestic revenue mobilization;
- improved tax administration and compliance;
- rationalization of tax exemptions under a comprehensive Medium-Term Revenue Strategy.
- Authorities will reverse temporary fuel-tax relief and scale back non-priority capital spending while avoiding the accumulation of new arrears.
- Reforms to strengthen fiscal risk management and oversight will target:
- Food Reserve Agency (FRA) operations;
- state-owned enterprises;
- public-private partnerships;
- domestic payment and VAT refund arrears.
- Debt management and transparency will be strengthened by enhancing institutional capacity in the Debt Management Office.
Objective: "These measures will reinforce fiscal discipline, support private-sector-led growth, and strengthen economic resilience." (IMF staff statement)

With inflation at the BOZ target range, "monetary policy normalization has begun." (IMF staff statement)
Policy guidance and reforms:
- Monetary policy decisions should remain data-driven and focused on preserving price stability.
- BOZ will continue strengthening the monetary policy operational framework and improving policy transmission, including through reforms to liquidity management.
- Exchange-rate flexibility will remain an important shock absorber.
- Prudent reserve accumulation and close fiscal-monetary coordination will help preserve stability.
- Efforts to deepen the foreign exchange market and enhance policy communication will support orderly market functioning and limit excessive exchange-rate volatility.

Structural reform priorities to "unlock Zambia's growth potential" include:
- fostering a more competitive, diversified, and export-oriented private sector;
- strengthening governance and anti-corruption institutions;
- enhancing public financial management;
- increasing transparency in mining licensing and beneficial ownership;
- restoring transparent and competitive access to the TAZAMA pipeline.
The authorities intend to build on the Grow Zambia Agenda to ensure growth translates into better jobs, higher incomes, and improved living standards.

An IMF staff team, led by Mr. Edward Gemayel, visited Lusaka from September 29 to October 9, 2026, to discuss the authorities' request for a new arrangement under the ECF.
At the conclusion of the mission Mr. Gemayel issued a statement summarizing the staff-level agreement and noting that the Fund "looks forward to continuing its close partnership with Zambia in support of macroeconomic stability, debt sustainability, and inclusive growth." (IMF staff statement)
During the visit the team met with His Excellency President Hakainde Hichilema, Minister of Finance and National Planning Situmbeko Musokotwane, Bank of Zambia Governor Denny Kalyalya, senior government officials, and development partners.
Next formal step: IMF staff will prepare a report, subject to management approval, to be presented to the IMF's Executive Board for discussion and decision.