Musokotwane Expects IMF Deal To Be Finalised By End Of August

Finance Minister Situmbeko Musokotwane has said that he expects the International Monetary Fund (IMF) executive board to approve a bailout package for Zambia by the end of the month.

It follows a meeting of Zambia’s official creditors last month, in which nations pledged to negotiate a debt restructuring deal. The IMF’s Managing Director Kristalina Georgieva said she welcomed the move as it allows the fund’s board to consider signing off on further financing.

Restructuring Zambia’s debt burden has been a major priority for the UPND government since it came to power in August last year. At the end of 2021, external debts stood at $17.27 billion, after a decade of financial mismanagement by the Patriotic Front. 

Since then the government has reached a staff-level agreement with the IMF for a $1.4 billion three-year extended credit facility, conditional on Zambia’s ability to reduce its debt to sustainable levels. According to Musokotwane, that credit is now likely to be signed off on in the next few weeks.

Speaking at the same event as Mr Musokotwane on Friday, Finance Ministry Permanent Secretary Mukuli Chikuba announced that Zambia’s economy grew by 2.4% in the first quarter of 2022 and that the country’s economic environment was expected to continue improving because of advanced engagements with the IMF and other creditors.

Mr Chikuba also said that government revenue and grant collections are 5.5% ahead of their half-year budget target, while expenditures are 14.7% below their upper limit.

President Hakainde Hichilema recently called on his finance minister to announce a supplementary budget due to the unexpected windfall in tax revenue, spurred by economic growth. Mr Musokotwane is believed to be considering the proposal.