LowIV Macro Policy & Sovereign Debt9 October 2026, Friday
IMF reaches deal with Zambia on a new $1.47 billion programme
An IMF mission reached a staff-level agreement with Zambia on 9 October for a new 36-month Extended Credit Facility worth about $1.472 billion. The programme aims to repair a 2026 budget thrown off course by a revenue shortfall and food reserve spending.
According to the IMF statement carried by Zambia Monitor, a mission led by Edward Gemayel was in Lusaka from 29 September to 9 October and agreed a 36-month programme of SDR 1,076 million, about $1.472 billion. Two conditions must be met before it takes effect: approval by the IMF Executive Board and implementation of agreed prior actions. Zambia's previous $1.7 billion programme, launched in 2022, ended in January.
The IMF text published by Mirage News projects real growth of 5.6% in 2026. Inflation fell to 6.1% in September, within the Bank of Zambia's target band, and gross reserves hit a record $6.1 billion. Three items nonetheless upset the 2026 fiscal balance: weaker-than-expected VAT collection, low fuel tax receipts and Food Reserve Agency spending above budget. The programme aims to raise the primary surplus to 3% of GDP by 2029, starting in 2027.
Prior actions for the 2026 budget include reversing a temporary fuel tax cut, cutting non-priority capital spending and accruing no new arrears. Among structural steps to be monitored over the 36 months, the text requires restoring competitive access to the TAZAMA oil pipeline and beneficial ownership transparency for mining licences.
Talay assessment
Bottom line
After a $1.7 billion crisis programme, Zambia is now getting a precautionary framework: reserves are at a record, inflation is on target, and the problem lies on the fiscal side. Reversing the fuel tax cut carries a political cost with oil above $100. The likeliest path is Board approval towards the end of the year, with the first tranche released once the prior actions are complete.
Likely effects
- BudgetUncertain6 months+
The goal of lifting the primary surplus to 3% of GDP by 2029 requires narrower tax exemptions and spending restraint from 2027 onwards.
- Fuel pricesNegativeWeeks
Reversing the temporary tax cut lifts pump prices and risks a fresh rise in inflation, which has fallen to 6.1%.
- External confidencePositive1–6 months
A $1.47 billion anchor and record reserves of $6.1 billion limit pressure on the kwacha and on Zambia's external borrowing costs.
Possibilities, ranked
- 1Board approval by year-end65%
Prior actions are completed and the Executive Board approves the programme around December.
Watch: A Zambia item on the IMF Executive Board calendar and the fuel tax adjustment
- 2Delay on prior actions25%
Reversing the fuel tax meets political resistance and approval slips into 2027.
Watch: Lusaka postponing the fuel price adjustment
- 3Programme suspended10%
New arrears or a fiscal slippage reopen negotiations.
Watch: A fresh budget overrun in Food Reserve Agency spending
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- New IMF programme▲ $1.47bn
- September inflation▲ 6.1%