The International Monetary Fund (IMF) has approved a US$1.3 billion financial assistance programme for Zambia, the Bretton Wood institution announced on Thursday.
The Fund said in a statement that its executive board approved a 38-month arrangement under the Extended Credit Facility (ECF).
The programme is based on the Zambian government’s “homegrown economic reform plan that aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth,” it said.
“The ECF-supported programme will help re-establish sustainability through fiscal adjustment and debt restructuring, create fiscal space for social spending to cushion the burden of adjustment, and strengthen economic governance, including by improving public financial management,” IMF said.
The programme is also expected to catalyse much-needed financial support from Zambia’s development partners.
Zambia is dealing with the legacy of years of economic mismanagement, with an especially inefficient public investment drive.
Growth has been too low to reduce rates of poverty, inequality and malnutrition that are among the highest in the world.
The country is in debt distress and needs a deep and comprehensive debt treatment to place public debt on a sustainable path.