Zambia Reaches IMF Deal

Zambia has reached a staff-level agreement with the International Monetary Fund on a new three-year programme. The proposed Extended Credit Facility arrangement will help meet Zambia’s balance-of-payments and budget-financing needs while supporting debt sustainability.

The agreement remains subject to IMF Executive Board approval and the implementation of agreed measures before consideration. IMF Mission Chief Edward Gemayel said Zambia would enter the new programme from a position of strength following the achievements under the recently completed ECF-supported programme.

Economic growth is projected at 5.6% in 2026, supported by strong agricultural production, mining activity and exports. Inflation declined to 6.1% in September, falling within the Bank of Zambia’s target range, while foreign-exchange reserves reached $6.1 billion.

However, Zambia’s fiscal position weakened after value-added tax collections and fuel-tax revenue fell below expectations. Spending by the Food Reserve Agency also exceeded budgeted levels, weakening the primary fiscal balance compared with the strong result recorded in 2025.

The government is reversing temporary fuel-tax relief, reducing non-priority capital expenditure and taking measures to prevent new arrears. The proposed programme will use a revenue-led fiscal strategy to rebuild financial buffers and protect debt sustainability.

From 2027, Zambia plans to increase the primary surplus gradually to 3% of gross domestic product by 2029 through stronger revenue collection, tax administration and compliance. Tax exemptions will also be rationalised under a Medium-Term Revenue Strategy.

Reforms will strengthen oversight of the Food Reserve Agency, state-owned enterprises and public-private partnerships while addressing domestic payment and value-added tax refund arrears. With inflation back within the target range, monetary-policy normalisation has begun.