Zambia Completes Its IMF Programme. Now the Hard Part Begins
By Savior Mwambwa January 8, 2025
Zambia’s Ministry of Finance just released an important statement on the IMF programme. The headlines are since reading all sorts of manner including “Zambia ends IMF programme” , “Zamba abandons IMF programme” or something equally misleading. So hopefully this article will offer some clarity and context.
What’s happening is more nuanced; Zambia is completing its current Extended Credit Facility (ECF) arrangement, which began in 2022 and was always set to conclude around now. The government is signaling it wants to negotiate a successor programme with the Fund rather than take a one-year extension of the existing one.
The current ECF was fundamentally a stabilization programme. As far as one can tell from a number of sources and evidence, It did what stabilization programmes do: restore fiscal discipline, bring down deficits, build reserves, and create conditions for debt restructuring. And here, credit where it’s due, Dr. Situmbeko Musokotwane has steered Zambia through one of the most successful IMF programme implementations on the continent( with all relevant caveats in place). Six reviews completed without suspension. Primary surpluses above 2% of GDP. External buffers strengthened. No programme breaks. By Fund standards, this is exceptional performance, particularly for a country that entered the arrangement in debt distress.
The debt restructuring, while painful and protracted, is nearing completion. That this happened at all is worth acknowledging. Many ( including I ) predicted Zambia would falter. It didn’t. Dr. Musokotwane and his team at Treasury, the Bank of Zambia, and ZRA delivered.
But stabilization is not transformation. And this is where the transition becomes interesting and, frankly, risky.
Dr. Musokotwane is framing the successor programme as “growth-focused” with emphasis on investment, job creation, and productive capacity. This is the right framing. Zambia cannot stabilise its way to prosperity. At some point, you have to invest in things that generate returns, create employment, and build an industrial base. The Minister’s explicit acknowledgment that “other evolving economic priorities, especially economic growth ambitions” must now take centre stage suggests he understands this.
The question is whether the successor programme will genuinely enable this shift or simply reproduce the same constraints under different language.
Here’s the context that makes this complicated. 2026 is an election year. The Hichilema administration will be seeking a second term having asked Zambians to endure significant sacrifices for macroeconomic stability. Free education and some infrastructure gains are visible fruits, but the jobs question remains largely unanswered. Youth unemployment is still the issue that keeps policymakers up at night. Or should.
Any successor programme negotiated in this environment will face competing pressures. The IMF will want continued fiscal discipline and may be cautious about what it considers “growth-oriented” spending. The government will want space to demonstrate economic delivery before voters go to the polls. Civil society and citizens will want relief after years of austerity.
What should Zambia push for in the successor arrangement?
First, a genuine recalibration of fiscal targets that creates space for productive public investment: Not a return to reckless borrowing, but recognition that infrastructure, skills development, and industrial policy require upfront spending that stabilization-era frameworks tend to squeeze out. The primary surplus targets served their purpose. The next phase needs different metrics.
Second, flexibility on domestic resource mobilization timelines: Broadening the tax base and improving administration are correct priorities, but aggressive revenue targets in an election year can become politically toxic and economically counterproductive if they squeeze the informal sector and small enterprises that employ most Zambians.
Third, protection for strategic industrial policy: Zambia sits on copper and critical minerals at precisely the moment global demand is surging. Dr. Musokotwane noted in his statement that reforms included “bringing back to life mining companies” so Zambia can benefit from favorable copper prices. This is exactly right. A successor programme should not constrain the government’s ability to pursue local content requirements, value addition mandates, or strategic use of mining revenues for industrialization. These should not be seen as distortions but as development strategy.
Fourth, longer programme duration with realistic benchmarks: Dr. Musokotwane’s stated preference for “a full program that runs the full course” rather than a short extension is sensible. Short programmes create constant negotiation cycles that consume policy bandwidth and generate uncertainty. A three to four year arrangement with clear structural benchmarks allows for sequencing reforms properly and, importantly, extends beyond the electoral cycle as the Minister himself noted.
What should Zambia push back on?
Conditionalities that effectively constrain industrial policy space. The Fund has historically been skeptical of state intervention in markets, though this is slowly changing. Zambia should resist any framework that treats beneficiation requirements or strategic sector support as problematic.
Unrealistic assumptions about private sector response to stability. The theory that macro stability automatically attracts investment and creates jobs has limited empirical support in African contexts. Stability is necessary but not sufficient. Active state coordination remains essential.
What should Zambia avoid?
Using the transition period to abandon fiscal discipline entirely. Dr. Musokotwane was right to emphasise that during the gap between programmes, “the Government will remain firmly anchored to its reform path” with expenditure and borrowing within Parliament-approved ceilings. The hard-won credibility from completing the ECF should not be squandered by pre-election spending binges. Markets and creditors are watching.
Treating the successor programme as purely an external obligation rather than an opportunity to anchor homegrown priorities. If Zambia negotiates a framework that genuinely reflects its industrialisation and jobs agenda, the IMF programme becomes a tool rather than a constraint. If it simply accepts whatever template the Fund offers, the programme will feel like more of the same regardless of the growth rhetoric.
The deeper question is whether Zambia can use this moment to demonstrate what a post-stabilisation African development programme actually looks like. One where the country owns the design, the priorities are genuinely growth-oriented, and the metrics measure outcomes that matter to citizens rather than just fiscal ratios that matter to creditors.
Conclusion
Dr. Musokotwane closed his statement by emphasising that reforms “are not contingent on any single external arrangement” and “reflect national ownership.” That’s the right sentiment. He has earned the credibility to make that claim. The test is whether the successor programme embodies it. Zambia has earned the right to negotiate from a position of relative strength. The question is whether it will use that position to secure genuinely different terms or settle for continuity dressed in new language.
