The International Monetary Fund announced on Tuesday that it had decided to provide $574 million in funding to help Zambia recover from a catastrophic drought.
The “staff-level agreement” is pending approval by the IMF’s executive board and comes after an evaluation of a $1.3 billion loan that the organization gave to the indebted African country in 2022.
“The 2024 outlook has worsened due to the drought; GDP growth is now projected at 2.3 percent, half the forecast in December 2023,” stated Vera Martin, the IMF’s mission chief for Zambia.
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The deal followed a request from Lusaka to increase the loan deal from $1.3 billion to $1.7 billion.
Once approved it will allow Zambia “immediate access” to roughly $574 million, Martin added.
Last month, the UN food agency warned that a drought caused by the El Nino weather phenomenon in Zambia had obliterated crops, pushing millions to the brink of starvation.
The IMF said Zambia has agreed to target emergency relief to the most vulnerable while sustaining fiscal consolidation efforts to restore debt sustainability.
The deal, according to Zambia’s Finance Minister Situmbeko Musokotwane, is evidence of the government’s attempts to restructure the economy and clean up its books.
“We are happy that the IMF acknowledges the efforts we are making to revitalise Zambia’s economy and achieve sustainable growth,” said Musokotwane.
At the time of its default in 2020, during the worst of the Covid-19 pandemic that ravaged Africa, Lusaka owed over $18 billion.
Since then, after years of negotiations, it has finally secured a long-awaited debt restructuring agreement with its creditors.
