The International Monetary Fund (IMF) has granted Zambia an immediate disbursement of $189mn following the approval of its first review of a $1.3bn loan program, the IMF announced on Thursday, Reuters reports.
This decision comes after Zambia reached an agreement last month with foreign governments, including China, to restructure approximately $6.3bn of its external debt.
IMF Managing Director Kristalina Georgieva emphasized the importance of finalizing and signing the Memorandum of Understanding with the Official Creditor Committee (OCC). She stated that the timely implementation of this agreement, along with similar agreements with private creditors, will help restore Zambia's debt sustainability in the medium term.
During the COVID-19 pandemic, Zambia became the first African country to default on its sovereign debt and faced significant delays in debt restructuring negotiations. However, the IMF noted that Zambia has performed well under the support program, meeting all quantitative performance criteria for the first review. The IMF projects that Zambia's total public debt will decrease to 88.5% of its gross domestic product (GDP) by the end of 2026, down from around 110% of GDP by the end of this year.
Although Zambia's economic growth is expected to moderate to 3.6% in 2023, the IMF anticipates an acceleration of 4.3% in 2024 and a stable growth rate of around 5% per year over the medium term.
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