Zambia Withdraws Request for IMF Loan Extension as It Bets on Domestic Recovery

Zambia has withdrawn its request for a one-year extension of its International Monetary Fund Extended Credit Facility (ECF), signaling a strategic shift as the country looks to stabilize its economy without additional IMF oversight.

The IMF confirmed the decision on Wednesday, noting that no official explanation was provided for the reversal. The ECF agreement, approved in 2022, was designed to support Zambia’s financial recovery after the country defaulted on its international debt in 2020. An extension would have unlocked an additional $145 million in financing and prolonged IMF monitoring.

Instead, Zambia is now expected to rely on domestic revenue generation, market-based financing, and alternative development partners to bridge any remaining fiscal gaps.

The move comes at a politically sensitive moment, with the country facing double-digit inflation ahead of its August general elections. Despite these pressures, the government has projected a stronger economic outlook for 2026, forecasting that the budget deficit will be cut by more than half and economic growth will exceed 6 percent.

The IMF’s sixth and final review of Zambia’s existing ECF arrangement is scheduled to be presented to the Fund’s executive board later this month. That review will mark the formal conclusion of the program that played a central role in Zambia’s post-default recovery efforts.

Zambia’s decision reflects growing confidence among policymakers that the economy can transition beyond emergency support, even as inflation, debt management, and social pressures remain key challenges for the southern African nation.

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