The International Monetary Fund on Thursday urged the “timely” implementation of Zambia’s landmark debt deal that released $189 million, part of a $1.3 billion three-year aid plan to copper-rich countries. .
Zambia has total debt of $32.8 billion and defaulted on $18.6 billion of external debt in 2020 at the height of the COVID-19 pandemic.
Foreign financial institutions agreed last month to restructure about a third of the country’s debt after two years of tough negotiations.
The fund’s managing director, Kristalina Georgieva, called for “timely implementation of this agreement.”
In a statement, he said the deal “should restore Zambia’s debt sustainability in the medium term.”
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The IMF has applauded Zambia’s reform efforts under President Hakainde Hichilema, who was elected on a promise to strengthen a struggling economy and reverse past economic mismanagement.
“The Zambian authorities have made commendable efforts over the past two years to stabilize the economy despite continuing severe external shocks,” Georgieva said.
The fund’s board on Thursday approved $189 million in “immediate disbursements,” following initial reviews of a $1.3 billion loan approved last year to restore financial stability.
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According to the fund, the total amount to be released under the arrangement will be about US$374 million.
The IMF praised the “decisive steps” taken by Prime Minister Lusaka to cut “inefficient public spending” and boost “social spending.”
Zambia’s economy is starting to “strengthen” and growth is expected to “accelerate in 2024 and settle at around 5% in the medium term,” he said.
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