The Executive Board of the International Monetary Fund (IMF) has approved a US$1.3 billion extended credit facility for Zambia.
The facility was to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth in Zambia.
This information was contained in the Press Release from International Monetary Fund(IMF).
Part of the press release reads, “Restoring fiscal sustainability will require a sustained fiscal adjustment. The authorities’ adjustment plans appropriately focus on eliminating regressive fuel subsidies, enhancing the efficiency of the agricultural subsidy program, and reducing inefficient public investment.
Domestic revenue mobilization also needs to support the medium-term adjustment. The adjustment creates fiscal space for increased social spending to cushion the burden on the most vulnerable, help reduce poverty, and invest in Zambia’s people”.
The ongoing expansion of the authorities’ Social Cash Transfer program and plans to increase Public spending on health and education are particularly welcome.
Together with the fiscal adjustment, Zambia needs a deep and comprehensive debt treatment under the G20 Common Framework to restore debt sustainability.
“A substantial strengthening of fiscal controls is needed to support the fiscal adjustment, as well as address governance and corruption vulnerabilities. Public investment management and procurement practices need to be strengthened to ensure transparency and the efficient use of scarce resources. It will also be important to bolster the framework for monitoring fiscal risks, particularly those related to large state-owned enterprises.
“The Bank of Zambia should continue its efforts to reduce inflation and preserve financial stability. International reserves should be replenished as conditions allow and the exchange rate should continue to reflect market conditions. Addressing high NPL levels and ensuring adequate capital buffers will also be important.”