THE International Monetary Fund (IMF) says Zambia needs the nod of its bilateral creditors on the stalled debt restructuring before the country can access part of its bailout funds.
The fund said in a statement issued Thursday, April 6 that although $188 million of Zambia’s $1.3 billion bailout money was ready to be drawn down, it could not be paid out until its official creditors reached an agreement on the debt treatment exercise that started in mid 2022 but remains hanging.
The statement was issued Thursday, April 6 by an IMF Mission that concluded the first review of the country’s extended credit facility (ECF) and also conducted discussions on its 2023 Article IV Consultation.
It noted that the agreement with the bilateral creditors would allow the disbursement to be approved by IMF Management and formally completed by the IMF Executive Board – the last hurdle to be crossed before the money hits the country’s account. The IMF had earlier disbursed about $188 million to the Zambian government under the ECF meant to help stabilise the debt and Zambian currency for growth to resume.
The southern Africa nation was the first in the continent post-COVID-19 to resort to the IMF for support after defaulting on its debts in 2020.
Its request, however, dragged as debt restructuring with creditors delayed. It was finally approved in June 2022, with the IMF agreeing to inject $1.3 billion into the debt-ridden economy under tranches tied to conditions agreed with the government.
In the April 6 release, the IMF Mission said: “All structural benchmarks and quantitative performance criteria for the first review have been met.”
“Zambia will have access to about $188 million in financing once the review is approved by IMF Management and formally completed by the IMF Executive Board. To remove any hurdles to the timely completion of the review, Zambia needs official creditors to move forward and reach agreement on a debt treatment in line with the financing assurances they provided in July 2022,” the statement said.
It explained that an agreement with official creditors on a debt treatment in line with the programme parameters would provide the needed financing assurances.
Upon completion of the Executive Board review, Zambia would have access to SDR 140 million (about $188 million), bringing the total IMF financial support disbursed under the arrangement to SDR 280 million (about $376 million),” it said.
The IMF Mission said the Zambian economy remained relatively resilient in spite of the increasingly challenging global economic backdrop.
It said the economy grew at 4.7 per cent in 2022 in spite of weaknesses in the mining and agriculture sectors.
Inflation has remained in single digits since May 2022 but is under increasing pressure, with the sustained depreciation of the exchange rate, the statement said.
The tightening of monetary conditions in February by the Bank of Zambia was an appropriate policy response,” the IMF Mission added.
Source: Graphiconline
