Zambia reaches preliminary $1.47 billion financing agreement with the IMF

15:30

By: Azzat Manal

Zambia reaches preliminary $1.47 billion financing agreement with the IMF

Zambia has reached a preliminary agreement with the International Monetary Fund (IMF) on a $1.47 billion financing programme designed to support the country's balance of payments, help finance the national budget and strengthen economic stability. The proposed arrangement would run for 36 months and is intended to support the government's economic reform efforts while promoting sustainable growth.

The agreement was announced following an IMF mission to Lusaka that took place from September 29 to October 9. The programme remains subject to approval by the Fund's Executive Board and the implementation of previously agreed measures, meaning that the financing has not yet received final authorisation.

Edward Gemayel, who led the IMF mission to Zambia, said the proposed programme would help the country preserve macroeconomic stability, maintain debt sustainability and encourage growth driven by the private sector. These objectives come as the southern African nation continues to address fiscal pressures and strengthen the foundations of its economy.

The IMF expects Zambia's real gross domestic product to expand by 5.6% in 2026, supported by stronger agricultural production, mining activity and exports. These sectors play a significant role in the country's economic performance, particularly copper mining, which remains an important source of foreign exchange and government revenue.

Economic indicators have also shown some improvement. Inflation fell to 6.1% in September, while international reserves reached a record $6.1 billion, according to the figures cited in the programme announcement. Higher reserves can help a country meet external payment obligations and provide a buffer against economic shocks, although maintaining this position depends on export earnings, foreign currency needs and wider financial conditions.

Despite these positive developments, Zambia's public finances came under renewed pressure in 2026. Government revenue fell short of expectations, while spending increased, including expenditure linked to the Food Reserve Agency, which plays a role in national food security. The gap between expected revenue and actual spending has complicated efforts to maintain fiscal discipline.

Under its medium-term plans, the Zambian government aims to raise the primary budget surplus to 3% of GDP by 2029. The primary balance measures the difference between government revenue and expenditure before interest payments on public debt. Authorities intend to improve revenue collection and review tax exemptions as part of efforts to achieve this target.

The proposed IMF programme also places emphasis on stronger public debt management, greater transparency in the mining sector, improved governance and anti-corruption measures. At the same time, the authorities are expected to protect priority social spending, reflecting the challenge of balancing fiscal consolidation with the needs of vulnerable households and essential public services.

The final impact of the agreement will depend on the programme's approval, implementation and the government's ability to meet its policy commitments. For Zambia, the arrangement represents a further step in efforts to stabilise public finances, strengthen external resilience and create conditions for more sustainable, private-sector-led economic growth.