EAZ Welcomes $1.5 Billion IMF Facility, Calls for Concessional Financing

The Economics Association of Zambia (EAZ) has welcomed the proposed 1.5 billion US dollar financing facility under the International Monetary Fund (IMF) Extended Credit Facility (ECF), describing it as an important step towards stabilizing the macroeconomic environment and supporting the country’s economic growth agenda.

EAZ National Secretary John Musantu,  said a stable macroeconomic environment, characterized by controlled inflation, affordable interest rates, a stable exchange rate, adequate foreign reserves and improved domestic revenue mobilization, is essential for the successful implementation of the Grow Zambia Agenda (GZA).

Dr. Musantu said the country must also strengthen financing mechanisms to support the expansion of key economic sectors and achieve its ambition of doubling the size of the economy.

He stated that government should optimize domestic borrowing while ensuring that the private sector, particularly small and medium-sized enterprises (SMEs), has adequate access to affordable financing.

Dr Musantu noted that excessive investment by financial institutions in government securities can limit the funds available for lending to businesses, potentially constraining private-sector growth and job creation.

He said the sustainability of the Grow Zambia Agenda depends on the development of a thriving and profitable private sector capable of driving investment, production and employment.

Dr Musantu added that domestic financing alone may not be sufficient to fund the country’s ambitious economic transformation, making it necessary to mobilize additional resources through foreign direct investment (FDI) and external borrowing.

He said concessional loans should be prioritized because they offer more favorable borrowing terms than commercial debt.

Dr Musantu describes the proposed 1.5 billion US dollar IMF Extended Credit Facility as a welcome development, noting that concessional financing can support macroeconomic stability and strengthen the country’s capacity to withstand external shocks.

He mentioned that the agreement comes at a critical time when the economy faces uncertainties arising from geopolitical conflicts that are affecting global oil markets, as well as potentially unfavorable weather patterns that could negatively affect the energy and agriculture sectors.

Dr Musantu says the facility, once finalized, is also expected to help ease government pressure on the domestic credit market by supporting the financing of public spending obligations.

The EAZ has further urged government to maintain transparency in the disclosure of economic information to encourage informed and productive public discussions as Zambia pursues its economic transformation agenda.