IMF Anticipates No Further Relief Needed For Zambia Post-Debt Programme

The International Monetary Fund (IMF) has said it does not anticipate that Zambia will require any further relief beyond its 2022-2025 debt programme, providing a ringing endorsement of President Hakainde Hichilema’s fiscal management.

Speaking at a briefing on Wednesday, the IMF’s mission chief Allison Holland said “We expect the debt relief to be provided now will be sufficient to meet the need … of the goals that we have outlined.”

Holland said that Zambia’s authorities have outlined a goal to have a memorandum of understanding (MoU) with its official creditor committee by the end of 2022. The MoU would be a joint agreement, Ms Holland said, and Zambia will have to reach specific bilateral agreements with all its creditors to operationalise it.

Having successfully negotiated a $1.3 billion bailout agreement with the IMF, the Zambian government is now seeking $8.4 billion in debt relief from its bilateral creditors under a debt management plan agreed with the Fund. 

The IMF’s confidence that this restructuring will be sufficient to tackle Zambia’s economic challenges speaks to the bold and decisive action taken by President Hichilema’s government since they took office in August 2021.

At its height, Zambia’s debt burden reached 120% of its GDP following years of profligacy under the Patriotic Front.

Since taking office, President Hichilema’s government has successfully brought down inflation from 22.1% in September 2021 to 9.8% in August 2022, helping ordinary Zambians to afford vital commodities such as food and fuel.

The value of the Kwacha has also stabilised, becoming the best performing currency in the world against the dollar after the announcement of the IMF deal. This makes it easier for the government and businesses to import resources such as petroleum and fertiliser which are not manufactured in Zambia.