Earlier in the year, the government had been weighing the option of a one-year extension of its current Extended Credit Facility (ECF). Such an extension would have unlocked an estimated $145 million in additional IMF funding. However, authorities have now opted against this approach, choosing instead to negotiate a successor programme that would replace the current arrangement once it formally concludes.
In a statement, the Ministry of Finance emphasised that the decision reflects progress rather than a change in direction. Officials stressed that Zambia is completing its current programme as planned and is now preparing to move forward under a new framework. The ministry was careful to clarify that the shift should not be interpreted as a retreat from cooperation with the IMF or a weakening of the government’s commitment to economic reforms.
Zambia’s existing IMF programme was approved in 2022, two years after the country became Africa’s first sovereign to default on its debt during the COVID-19 pandemic. The ECF was designed to help restore debt sustainability, stabilise public finances, and rebuild confidence among international investors and creditors. It also formed a critical foundation for Zambia’s broader debt restructuring efforts under the G20 Common Framework, which involved negotiations with both official and private creditors.
The programme is due to undergo its sixth and final review by the IMF’s executive board later this month. Successful completion of this review would formally close the current arrangement and clear the way for discussions on a new programme. According to the IMF, talks on a successor facility are expected to begin shortly after the ECF ends.
Market reaction to the news was initially cautious. On Wednesday, the IMF disclosed that Zambia had dropped plans to extend the programme, which led to some pressure on the country’s international bonds. Although prices weakened in early trading on Thursday, they later recovered part of the losses after confirmation that Zambia would instead pursue a full new programme. Data from Tradeweb showed that Zambia’s dollar-denominated bond maturing in December 2053 was trading slightly lower at around 72.13 cents on the dollar by mid-morning GMT.
Despite ongoing challenges, Zambia’s economic outlook has shown signs of improvement. The IMF estimates that the economy expanded by about 5.8% in 2025, supported by growth in agriculture, mining, and services. Inflation, which has remained elevated and has been a major concern for households, is expected to gradually decline and return to the central bank’s target range of 6% to 8% within the next two years, provided macroeconomic stability is maintained.
The timing of the transition is politically sensitive. President Hakainde Hichilema is preparing for general elections scheduled for August, at a time when the cost of living remains high and public expectations for economic relief are growing. The government has indicated that maintaining policy continuity and reform credibility during the transition between IMF programmes is a top priority.
President Hichilema has repeatedly reaffirmed his administration’s commitment to fiscal discipline, debt management, and structural reforms, arguing that these measures are essential for long-term economic recovery. A new IMF programme is expected to build on the foundations laid by the current ECF, potentially focusing on sustaining growth, strengthening social protection, and ensuring that debt remains on a sustainable path.
While details of the proposed successor programme have not yet been made public, analysts expect it to play a key role in anchoring economic policy, reassuring investors, and supporting Zambia’s continued engagement with international partners. For the government, the move signals an intention to shift from crisis management toward longer-term economic consolidation, even as it navigates domestic political pressures and external financial risks.
Source: Africa Publicity
