“The IMF would like to negotiate with a government that has time to implement what has been negotiated,” Musokotwane said in an interview in Cape Town, signaling that the lender prefers to work with an administration that has a full post-election term ahead of it.
Why Zambia needs a new program
Zambia’s previous IMF deal, a $1.7 billion extended-credit facility approved in 2022, expired in January after shepherding the country through a complex debt restructuring triggered by a historic default.
The original 2022 request had been for $1.3 billion, before being revised upward to shore up the economy and prevent a deeper crisis. Last week, the IMF approved its sixth and final review of that program, unlocking another $190 million for the country.
Lusaka had hoped to tag on an extra $145 million via a one-year extension, but ultimately scrapped that plan in favor of negotiating a brand-new program, one that reflects a stabilizing economy and a shift toward longer-term growth priorities.
Elections will set the pace
President Hakainde Hichilema, who is seeking a second term in August, came into office in 2021 promising to repair the economic wreckage left by Zambia’s 2020 default.
His administration secured the IMF deal within months, restored international confidence, and embarked on fiscal consolidation in 2022.
Musokotwane has repeatedly said that this fiscal discipline will continue, even in the gap between IMF programs.
But political timing now looms large. Parliament dissolves in May. That left observers wondering whether a new IMF agreement could realistically be closed before then, Musokotwane’s comments suggest the answer is no.
Copper Is a lifeline, but spending pressures are building
Zambia’s near-term financial breathing room is being supported by a rally in copper, which accounts for more than 70% of its exports. Higher prices and rising output are expected to bolster state revenues this year.
But expenses are rising too. A recent constitutional change expanded the number of parliamentary constituencies, adding budget pressure in an election cycle.
“Definitely we’ll have to have a supplementary” budget to cover the additional costs, Musokotwane told Bloomberg.
With the economy on more stable footing, Zambia’s next IMF program is expected to shift from crisis-management to growth strategy. Likely areas of focus include; Boosting job creation; Accelerating economic growth; Maintaining fiscal discipline; Deepening reforms after debt restructuring
Still, the real negotiations will wait until after August, when Zambia knows who will be in charge of implementing whatever the IMF signs off on.
