IMF staff complete mission to Zambia

IMF staff complete mission to Zambia

May 9, 2024

End-of-mission press releases include statements by IMF staff teams that convey preliminary findings after a country visit. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.

• An IMF team visited Lusaka from April 24 to May 7 to discuss recent economic and financial developments, as well as economic policies that could underpin the Third Review of the IMF’s Extended Credit Facility.
• The team held productive conversations with authorities. Discussions will continue virtually in the coming weeks, including to better assess the economic impact of the drought and agree policies to support the completion of the ECF review.
• Reform efforts will continue to focus on sustaining macroeconomic stability and restoring fiscal and debt sustainability, while addressing humanitarian relief required by the drought.

Washington DC: An International Monetary Fund (IMF) mission led by Ms Vera Martin visited Lusaka on April 24^th to May 7^th2024, to discuss the economic and financial policies that could support the approval of the Third Review under the agreement supported by the Extended Credit Facility (ECF).

At the end of the mission, Mrs. Vera Martín issued the following statement:

“Zambian authorities and IMF staff advanced technical work as part of their discussions for the Third Review under the Extended Credit Facility. Discussions focused on analyzing recent economic events and assessing the economic impact of the drought.

“Growth in 2024 is now projected at (2.3) percent, while inflationary pressures driven by external supply factors and exchange rate depreciation persist.

“There was agreement between IMF staff and the Zambian authorities on the need to sustain macroeconomic stability and restore fiscal and debt sustainability in line with the program parameters. In the face of continued uncertainty, it will be essential to adopt agile policies to respond to the impact of the drought while maintaining external reserves.

“Zambian authorities have made commendable progress in implementing crucial reforms under the Fund-supported programme, including significant fiscal efforts in 2023 despite lower mining revenues. Despite consolidation, authorities have increased social spending to support the most vulnerable and continue providing free primary education. Near-term reform priorities should focus on permanent revenue measures and better cash and liability management that would reduce crucial financing needs to restore fiscal space and debt sustainability. In addition, strengthening tax administration, eliminating tax exemptions and actively combating tax evasion can also increase revenue and improve governance. It is essential to continue making progress in improving transparency and promoting governance reforms, especially in the energy sector.

““Discussions will continue virtually in the coming weeks until the completion of the Third Review of the ECF. The team would like to thank the Zambian authorities for their cooperation, hospitality and constructive discussions.”