The Zambian government has defended its decision to seek a 12-month extension of the International Monetary Fund’s (IMF) Extended Credit Facility (ECF), with Finance and National Planning Minister Dr Situmbeko Musokotwane stating that the move is critical to consolidating macroeconomic stability, sustaining investor confidence, and securing much-needed donor support.
The current ECF arrangement, approved in August 2022 and set to conclude in October 2025, has provided Zambia with approximately USD 1.3 billion in concessional financing, tied to performance benchmarks on fiscal consolidation, debt transparency, and structural reform. According to the IMF, the programme was designed to support Zambia’s efforts to restore debt sustainability following its historic default during the COVID-19 pandemic and to rebuild buffers for future economic shocks.
Speaking during a press briefing in Lusaka on Tuesday, Dr Musokotwane said the IMF programme had helped boost investor confidence and reassure creditors of the country’s policy direction. He noted that recent debt restructuring has already begun to yield results, with renewed lending to the private sector and increasing demand for domestic government securities.
The Minister warned that without the IMF programme, Zambia risks losing donor commitments, including the approximately USD 145 million in external support targeted for the 2026 budget. He argued that the extension would send a signal of continuity to cooperating partners and provide Zambia with the necessary policy space to deepen reforms in public finance management, social service delivery, and economic governance.
The Zambian Cabinet authorised the formal application for extension in late July. The proposal is now under review by the IMF Executive Board, which will assess Zambia’s performance under the current agreement and the broader economic outlook before making a determination.
Experts have offered varied assessments of the decision. Many consider the move strategically sound in the short term, especially given Zambia’s fragile post-default recovery. Dr Grieve Chelwa, a Zambian economist at the Wits School of Governance, has argued that extending the programme provides fiscal credibility at a time when investor sentiment remains cautious. “Zambia is still recovering from a sovereign debt crisis. Abandoning reforms too soon could undermine progress and send mixed signals to markets,” he remarked in a 2025 regional finance forum.
Other scholars urge a balanced view, noting potential drawbacks of prolonged IMF engagement. Dr Daniel Ndulu, former Governor of the Bank of Tanzania, has pointed out that extended reliance on external programmes can constrain domestic policy flexibility. “The discipline imposed by IMF arrangements is useful, but over time it can limit a government’s ability to adapt policies to local political and social realities,” he observed during a Brookings panel on African debt sustainability.
Nonetheless, available macroeconomic indicators suggest Zambia has made modest but tangible gains under the current ECF. As of mid-2025, the country’s foreign exchange reserves had risen to around USD 3 billion, inflation had stabilised in single digits, and fiscal deficits had narrowed. The IMF and World Bank have both acknowledged these improvements in their latest reviews, while stressing the importance of sustained reform momentum.
In this context, the requested extension is widely viewed by analysts as a mechanism for protecting recent gains while reinforcing donor and investor confidence. However, the longer-term challenge remains reducing structural dependence on external financing. Experts argue that a successful exit from IMF assistance will require building robust domestic revenue systems, reducing leakages in public expenditure, and implementing homegrown development policies tailored to Zambia’s unique socio-economic context.
The final verdict on the extension rests with the IMF Executive Board. Whatever the outcome, Zambia’s approach reflects a calculated effort to balance external support with internal reform—an approach that, while not without risks, is grounded in a desire to consolidate a still-fragile recovery.
