CTPD Welcomes IMF Extended Credit Facility

In a statement released to the press, the Centre for Trade Policy and Development’s (CTPD) Executive Director, Isaac Mwaipopo, has praised the International Monetary Fund’s (IMF) extension of credit to the Zambian Government. The CTPD is encouraged by the news, noting that "Zambia will be able to restructure its unsustainable debt, regain macroeconomic stability, and ensure the debt’s sustainability”.

As of August 31, the IMF agreed a 38-month Extended Credit Facility agreement that will see $1.3bn loaned, interest free, to the Government of Zambia. The credit is intended to ensure the stability of Zambia’s loan repayments whilst freeing up cashflow for the productive and social sectors.

Further, the credit is expected to aid the agreement of more lenient financial commitments from international multilaterals such as the World Bank and African Development Bank. Respectively, these institutions are expected to provide the Government with approximately $959 million and $500m over a three-year period.

Mr Mwaipopo did, however, emphasise that “now is not the time to unwind” as there is still work to do. He described it as a “duty” to improve the effectiveness of public fund allocation and to secure foreign credit on increasingly favourable terms.

The CTPD placed a particular emphasis on seeking clarity as to how the extension of credit would positively impact Zambian civil society not simply the considerations of the national treasury. Consequently, the statement emphasised that a clear economic road-map should be provided in order to foster business confidence and to help citizens understand how the 2023 national budget will develop.

Negotiating a new deal with the IMF was a key manifesto promise of President Hakainde Hichilema’s United Party for National Development in the 2021 general elections. Renegotiating debt payments will free up government funding for infrastructure and vital services, including roads, hospitals and schools.

Since the IMF deal was announced the value of the Kwacha has shot up, becoming the best performing currency against the dollar in the world currently. This makes it cheaper for the government and businesses to import crucial commodities, such as fuel and fertiliser.