Zambia: Third Review Under the Arrangement Under the Extended Credit Facility, Requests for Augmentation of Access, Modifications of the Monetary Policy Consultation Clause and of Quantitative Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Zambia

© 2024 International Monetary Fund IMF Country Report No. 24/190 ZAMBIA THIRD REVIEW UNDER THE ARRANGEMENT UNDER THE EXTENDED CREDIT FACILITY, REQUESTS FOR AUGMENTATION OF ACCESS, MODIFICATIONS OF THE MONETARY POLICY CONSULTATION CLAUSE AND OF QUANTITATIVE PERFORMANCE CRITERIA, AND FINANCING ASSURANCES REVIEW—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR ZAMBIA In the context of the Third Review Under the Arrangement Under the Extended Credit Facility, Requests for Augmentation of Access, Modifications of the Monetary Policy Consultation Clause and of Quantitative Performance Criteria, and Financing Assurances Review, the following documents have been released and are included in this package: • A Press Release including a statement by the Chair of the Executive Board. • The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on June 26, 2024, following discussions that ended on May 7, 2024, with the officials of Zambia on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on June 13, 2024. • A Debt Sustainability Analysis prepared by the staffs of the IMF and the International Development Association. • A Supplementary Information updated on June 25, 2024. • A Statement by the Executive Director for Zambia. The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents. Copies of this report are available to the public from International Monetary Fund • Publication Services PO Box 92780 • Washington, D.C. 20090 Telephone: (202) 623-7430 • Fax: (202) 623-7201 E-mail: publications@imf.org Web: http://www.imf.org Price: $18.00 per printed copy International Monetary Fund Washington, D.C. June 2024 PR 24/242 Zambia: IMF Executive Board Completes Third Review Under the Extended Credit Facility and Approves Augmentation of the Arrangement FOR IMMEDIATE RELEASE • The IMF Executive Board completed the third review under the 38-month Extended Credit Facility (ECF) Arrangement for Zambia and approved an augmentation of the arrangement, providing Zambia with immediate access to about US$569.6 million. • Program performance has been satisfactory. All quantitative performance criteria for the third review were met, and all but one structural conditionalities were completed. • The authorities remain committed to supporting macroeconomic stability, restoring fiscal and debt sustainability, clearing arrears, and addressing Zambia’s drought-related humanitarian needs. They are also focused on advancing structural and governance reforms to promote inclusive growth. Washington, DC – June 26, 2024: The Executive Board of the International Monetary Fund (IMF) completed today the third review of Zambia’s 38-month Extended Credit Facility (ECF) Arrangement and approved an augmentation of SDR 293.46 million (about US$385.7 million). Completion of the review allows for an immediate disbursement of SDR 433.34 million (about US$569.6 million), bringing Zambia’s total disbursement so far under the ECF-supported program to SDR 852.98 million (about US$1.1 billion). Zambia’s ECF Arrangement was approved on August 31, 2022, for SDR 978.2 million (100 percent of quota, or about US$1.3 billion). The augmentation approved today increases access to SDR 1271.66 million (130 percent of quota, about US$1.7 billion,). The program supports Zambia’s home-grown Eighth National Development Plan that seeks to entrench macroeconomic stability, attain debt and fiscal sustainability, enhance public governance, and foster inclusive growth to improve the livelihood of the Zambian people, especially the vulnerable. Program performance has been satisfactory despite a challenging domestic and global environment. All quantitative performance criteria targets and all but one of the indicative targets for the end of 2023 were met. The authorities have also made progress in their structural reform agenda, with all continuous and end-December 2023 structural benchmarks, and all but one end-March 2024 structural benchmark being completed on time. Zambia is grappling with a severe drought that has significantly impacted agriculture and electricity generation, affecting a substantial share of the population. Consequently, growth 2 projections for 2024 have been revised down to 2.3 percent, from 4.7 percent, and the 2024 budget has been revised to accommodate the drought’s impact. Despite these challenges, the authorities remain committed to supporting macroeconomic stability, restoring fiscal and debt sustainability, clearing arrears, and addressing Zambia’s humanitarian needs. The authorities are also taking steps to improve governance and advance structural reforms to foster growth. Zambia is working on implementing the October 2023 Memorandum of