Zambia will seek a new financing program with the International Monetary Fund (IMF) after the expiration of its current Extended Credit Facility (ECF) in January 2026. Zambia Eyes New IMF Program. Finance Minister Situmbeko Musokotwane confirmed the country’s decision this week, announcing that Zambia will not extend the existing agreement but will instead negotiate a fresh deal once the current one formally ends.
Initially, the Zambian government had planned to request a one-year extension of the current IMF arrangement, which includes an additional US$145 million in funding. However, the government reversed this decision and chose to pursue a new agreement, reflecting the completion of all reviews and performance benchmarks under the existing facility. Musokotwane clarified that this shift is a sign of Zambia’s continued commitment to economic reform, rather than a breakdown in relations with the IMF.
Building on Progress from 2022
Musokotwane emphasized that the upcoming IMF program will build on the progress Zambia has made since entering the ECF in 2022. The ECF was specifically designed to help Zambia restore debt sustainability after its 2020 sovereign default. The successful completion of the current program’s reviews signals that Zambia is on track to secure continued support for its economic recovery efforts.
The announcement initially caused Zambia’s dollar-denominated bonds to dip before partially recovering. However, the Zambian kwacha continued its upward trend, buoyed by expectations of ongoing macroeconomic stability.
Political Transition and Economic Challenges Ahead
Zambia is entering a crucial period of economic and political transition, with general elections scheduled for August 2026. The country continues to face significant challenges, including high inflation and widespread public demand for improved living standards. As Zambia prepares for the upcoming elections, the government will need to balance the demands of political stability with the continued implementation of economic reforms.
Economists believe that a new IMF program could serve as a critical anchor for fiscal discipline and investor confidence. However, the timing of the negotiations and the associated conditionality will require careful management, particularly in the lead-up to the 2026 elections. Both Zambia and the IMF are expected to conclude negotiations in the first half of 2026, with both parties aiming to showcase continuity in economic reforms and effective debt management.
