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

ZAMBIA IMFCountryReportNo.24/190 June2024 THIRDREVIEWUNDERTHEARRANGEMENTUNDERTHEEXTENDEDCREDITFACILITY,REQUESTSFORAUGMENTATIONOFACCESS,MODIFICATIONSOFTHEMONETARYPOLICYCONSULTATIONCLAUSEANDOFQUANTITATIVEPERFORMANCECRITERIA, ANDFINANCINGASSURANCESREVIEW—PRESSRELEASE;STAFFREPORT;ANDSTATEMENTBYTHEEXECUTIVEDIRECTORFORZAMBIA InthecontextoftheThirdReviewUndertheArrangementUndertheExtendedCreditFacility,RequestsforAugmentationofAccess,ModificationsoftheMonetaryPolicyConsultationClauseandofQuantitativePerformanceCriteria,andFinancingAssurancesReview,thefollowingdocumentshavebeenreleasedandareincludedinthispackage: APressReleaseincludingastatementbytheChairoftheExecutiveBoard. TheStaffReportpreparedbyastaffteamoftheIMFfortheExecutiveBoard’sconsiderationonJune26,2024,followingdiscussionsthatendedonMay7,2024,withtheofficialsofZambiaoneconomicdevelopmentsandpolicies.Basedon informationavailableatthetimeofthesediscussions,thestaffreportwascompletedonJune13,2024. ADebtSustainabilityAnalysispreparedbythestaffsoftheIMFandtheInternationalDevelopmentAssociation. ASupplementaryInformationupdatedonJune25,2024. AStatementbytheExecutiveDirectorforZambia. TheIMF’stransparencypolicyallowsforthedeletionofmarket-sensitiveinformationand prematuredisclosureoftheauthorities’policyintentionsinpublishedstaffreportsandother documents. Copiesofthisreportareavailabletothepublicfrom InternationalMonetaryFundPublicationServicesPOBox92780Washington,D.C.20090Telephone:(202)623-7430Fax:(202)623-7201 E-mail:publications@imf.orgWeb:http://www.imf.orgPrice:$18.00perprintedcopy InternationalMonetaryFundWashington,D.C. ©2024InternationalMonetaryFund PR24/242 Zambia:IMFExecutiveBoardCompletesThirdReviewUndertheExtendedCreditFacilityandApprovesAugmentationoftheArrangement FORIMMEDIATERELEASE TheIMFExecutiveBoardcompletedthethirdreviewunderthe38-monthExtendedCreditFacility(ECF)ArrangementforZambiaandapprovedanaugmentationofthearrangement,providingZambiawithimmediateaccesstoaboutUS$569.6million. Programperformancehasbeensatisfactory.Allquantitativeperformancecriteriaforthethirdreviewweremet,andallbutonestructuralconditionalitieswerecompleted. Theauthoritiesremaincommittedtosupportingmacroeconomicstability,restoringfiscalanddebtsustainability,clearingarrears,andaddressingZambia’sdrought-relatedhumanitarianneeds.Theyarealsofocusedonadvancingstructuralandgovernancereformstopromoteinclusivegrowth. Washington,DC–June26,2024:TheExecutiveBoardoftheInternationalMonetaryFund(IMF)completedtodaythethirdreviewofZambia’s38-monthExtendedCreditFacility(ECF)ArrangementandapprovedanaugmentationofSDR293.46million(aboutUS$385.7million).CompletionofthereviewallowsforanimmediatedisbursementofSDR433.34million(aboutUS$569.6million),bringingZambia’stotaldisbursementsofarundertheECF-supportedprogramtoSDR852.98million(aboutUS$1.1billion). Zambia’sECFArrangementwasapprovedonAugust31,2022,forSDR978.2million (100percentofquota,oraboutUS$1.3billion).TheaugmentationapprovedtodayincreasesaccesstoSDR1271.66million(130percentofquota,aboutUS$1.7billion,).TheprogramsupportsZambia’shome-grownEighthNationalDevelopmentPlanthatseekstoentrenchmacroeconomicstability,attaindebtandfiscalsustainability,enhancepublicgovernance,andfosterinclusivegrowthtoimprovethelivelihoodoftheZambianpeople,especiallythevulnerable. Programperformancehasbeensatisfactorydespiteachallengingdomesticandglobalenvironment.Allquantitativeperformancecriteriatargetsandallbutoneoftheindicativetargetsfortheendof2023weremet.Theauthoritieshavealsomadeprogressintheirstructuralreformagenda,withallcontinuousandend-December2023structuralbenchmarks,andallbutoneend-March2024structuralbenchmarkbeingcompletedontime. Zambiaisgrapplingwithaseveredroughtthathassignificantlyimpactedagricultureandelectricitygeneration,affectingasubstantialshareofthepopulation.Consequently,growth 2 projectionsfor2024havebeenreviseddownto2.3percent,from4.7percent,andthe2024budgethasbeenrevisedtoaccommodatethedrought’simpact.Despitethesechallenges,theauthoritiesremaincommittedtosupportingmacroeconomicstability,restoringfiscalanddebtsustainability,clearingarrears,andaddressingZambia’shumanitarianneeds.Theauthoritiesarealsotakingstepstoimprovegovernanceandadvancestructuralreformstofostergrowth. ZambiaisworkingonimplementingtheOctober2023MemorandumofUnderstandingreflectingthedebtrestructuringagreementwiththeOfficialCreditorCommittee(OCC)throughbilateralagreements,markingacriticalstepintherestructuringprocess.Furthermore,ZambiareachedarestructuringagreementwithEurobondholdersonMarch25,2024,whichisinlinewithIMFprogramparameters,andtheOCCconfirmedcomparabilityoftreatmentamongcreditors.FollowingtheconsentsolicitationlaunchedonMay13,thebondexchangewassettledonJune11,2024.Zambiacontinuestoengageingoodfaithnegotiationswithothercommercialprivatecreditors,aimingforanagreementbyyear-end. FollowingtheExecutiveBoarddiscussiononZambia,Ms.AntoinetteSayeh,DeputyManagingDirector,andactingchair,issuedthefollowingstatement: “Theauthorities’satisfactoryperformanceunder