- IMF staff and the Zambian authorities have reached a staff-level agreement on a package of economic policies and reforms that could support a new 36-month arrangement under the Extended Credit Facility (ECF). The agreement is subject to approval by the IMF Executive Board.
- The proposed arrangement, with access of 1.472 dollars (SDR 1,076 million), would support Zambia's efforts to safeguard macroeconomic stability and debt sustainability, rebuild fiscal and external buffers, and advance stronger, more inclusive, private-sector-led growth.
- While Zambia's economy has strengthened considerably, and inflation has fallen sharply, fiscal pressures have intensified in 2026. The authorities' program aims to restore fiscal buffers by increasing revenues and expenditure restraint while protecting priority social spending. Structural reforms will help contain fiscal risks, bolster resilience to external shocks, and support economic diversification and job creation.
Lusaka, Zambia: An International Monetary Fund (IMF) staff team, led by Mr. Edward Gemayel, visited Lusaka from September 29 to October 9, 2026, to discuss the authorities' request for a new arrangement under The Extended Credit Facility (ECF) .
At the conclusion of the mission, Mr. Gemayel issued the following statement:
"The Zambian authorities and IMF staff have reached a staff-level agreement on economic policies and reforms that could underpin a new 36-month arrangement under the Extended Credit Facility. The proposed arrangement would support Zambia's balance of payments and budget financing needs while providing a strong policy anchor to preserve macroeconomic stability and debt sustainability. It would also support the authorities' efforts to advance a more diversified, resilient, and private-sector-led growth model. The agreement is subject to IMF Executive Board approval and contingent on the implementation of agreed prior actions.
"Zambia would enter the new program from a position of strength following the achievements under the recently completed ECF-supported program. Real GDP is projected to grow by 5.6 percent in 2026, supported by strong agricultural production, mining activity, and exports. Inflation declined to 6.1 percent in September within the Bank of Zambia's (BOZ) target range, while gross international reserves reached US$6.1 billion in September.
"Despite these gains, the fiscal position weakened due to revenue under performance, owing to weaker-than-projected VAT collections, and lower fuel taxes. At the same time, expenditures increased markedly, due to substantially higher-than-budgeted spending by the Food Reserve Agency (FRA). Weaking the primary fiscal balance relative to the strong outturn recorded in 2025. The authorities are taking decisive corrective measures, including reversing temporary fuel-tax relief and scaling back non-priority capital spending, while avoiding the accumulation of new arrears.
"The new program will be anchored by a growth-oriented , revenue-led fiscal strategy to rebuild fiscal buffers and safeguard debt sustainability. Beginning in 2027, the authorities will gradually increase the primary surplus to 3 percent of GDP by 2029 through stronger domestic revenue mobilization, improved tax administration and compliance, and the rationalization of tax exemptions under a comprehensive Medium-Term Revenue Strategy. Reforms will also strengthen fiscal risk management, improve oversight of FRA operations, state-owned enterprises, and public-private partnerships, and address domestic payment and VAT refund arrears, while protecting priority social and growth-enhancing spending. Debt management and transparency will be strengthened by enhancing institutional capacity in the Debt Management Office. These measures will reinforce fiscal discipline, support private-sector-led growth, and strengthen economic resilience.
"With inflation at the BOZ target range, monetary policy normalization has begun. Going forward, monetary policy decisions should remain data-driven and focused on preserving price stability. BOZ will continue strengthening the monetary policy operational framework and improving policy transmission, including through reforms to liquidity management. Exchange-rate flexibility will remain an important shock absorber, while prudent reserve accumulation and close fiscal-monetary coordination will help preserve stability. Efforts to deepen the foreign exchange market and enhance policy communication will support orderly market functioning and limit excessive exchange-rate volatility.
"Structural reforms will focus on unlocking Zambia's growth potential by fostering a more competitive, diversified, and export-oriented private sector. Building on the Grow Zambia Agenda, the authorities are committed to ensuring that economic growth translates into better jobs, higher incomes, and improved living standards. Reform priorities include strengthening governance and anti-corruption institutions, enhancing public financial management, increasing transparency in mining licensing and beneficial ownership, and restoring transparent and competitive access to the TAZAMA pipeline.
"IMF staff welcome the authorities' strong commitment to the reform agenda and the constructive policy discussions held during the mission. The Fund looks forward to continuing its close partnership with Zambia in support of macroeconomic stability, debt sustainability, and inclusive growth.
"The IMF team thanks the Zambian authorities and other stakeholders for their excellent cooperation and hospitality during the mission."
During the visit, the team met with His Excellency President Hakainde Hichilema, Minister of Finance and National Planning Situmbeko Musokotwane, Bank of Zambia Governor Denny Kalyalya, senior government officials, and development partners.
