AFP - Lusaka, Sept 1, 2022 (AFP) - The International Monetary Fund has approved a $1.3 billion loan to debt-ridden Zambia to help it restore fiscal stability while urging the country to battle corruption.
In 2020, as the Covid-19 pandemic battered Africa, Zambia became the first country on the continent to default on its foreign debt -- estimated at $17.3 billion.
Last December, the copper-rich nation Zambia clinched a tentative agreement with IMF staff to provide $1.3 billion in support funds, but only if it took credible steps to reduce its debt load to levels deemed sustainable.
In a statement released late Wednesday, the IMF said the facility will help Lusaka's homegrown reform plan to "restore debt sustainability, create fiscal space for much-needed social spending, and strengthen economic governance".
The Fund said the new government of Hakainde Hichilemna which came to power a year ago, is having to tackle years of economic mismanagement.
"A substantial strengthening of fiscal controls is needed to support the fiscal adjustment, as well as address governance and corruption vulnerabilities," said IMF managing director Kristalina Georgieva.
The IMF statement said Zambia's economic growth "has been too low to reduce rates of poverty, inequality, and malnutrition that are amongst the highest in the world.
"Zambia is in debt distress and needs a deep and comprehensive debt treatment to place public debt on a sustainable path".
Since the election last year, Hichilema's government has made progress in restoring relations with donors.
The IMF's announcement "is a vote of confidence in your government and in the people of Zambia," Hichilema said in a Facebook post.
"The international community has recognised the progress we have made and our commitment to reviving our economy and become a responsible member of the family of nations," he said.
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