The International Monetary Fund’s executive board has approved an immediate $189 million disbursement to Zambia following its first review of a $1.3 billion loan programme, the IMF said on Thursday.
The IMF board meeting came after Africa’s second-biggest copper producer clinched a deal last month with governments abroad including China to rework about $6.3 billion of its overseas debt.
“Swift finalization and signature of the Memorandum of Understanding with the OCC (Official Creditor Committee) will be important,” said IMF Managing Director Kristalina Georgieva in a statement.
“Timely implementation of this agreement, together with agreements with private creditors on comparable terms, should restore Zambia’s debt sustainability over the medium term,” she added.
Zambia was the first African country to default on its sovereign debt during the COVID-19 pandemic and faced lengthy delays in restructuring negotiations.
The IMF said that Zambia’s performance under the support programme had been strong, and that all quantitative performance criteria for the first review had been met.
Kristalina Georgieva said: “Zambia’s agreement with the Official Creditor Committee (OCC) under the G20 Common Framework on a debt treatment consistent with program parameters is very welcome. Swift finalization and signature of the Memorandum of Understanding with the OCC will be important. Timely implementation of this agreement, together with agreements with private creditors on comparable terms, should restore Zambia’s debt sustainability over the medium term.
“The Bank of Zambia should remain alert to inflationary pressures and continue reforms to preserve financial stability and enhance inclusion, even as the financial sector landscape evolves.
“Strengthening economic governance and addressing corruption vulnerabilities should remain a central aspect of reform, and the authorities’ commitment to implementing the recommendations of the IMF’s Diagnostic Report on Governance and Corruption, including to enhance transparency and robust implementation of public procurement regulations, is commendable. These reforms, combined with the authorities’ climate-smart growth policy, will provide a more conducive environment for private sector investment and growth.”
