Zambia's Economic Struggles: IMF's Lifeline Amidst Drought Crisis

The IMF has reached a staff-level agreement with Zambia for the fourth review of its loan program, potentially releasing $185.5 million. Zambia is grappling with drought-induced economic challenges including reduced agricultural output and power shortages. Inflation has surged to 15.7%, while 2024 GDP growth is forecast at 1.2%.

The International Monetary Fund (IMF) announced on Monday a staff-level agreement for the fourth review of Zambia's loan program, paving the way for a potential $185.5 million disbursement. This funding is contingent on formal approval by the IMF's management and executive board.

Discussions leading to this agreement took place during an IMF mission in Zambia from October 2-15 and continued at the IMF and World Bank annual meetings in Washington. The agreement arrives at a crucial time for Zambia as it battles economic hardships.

Zambia is facing significant economic setbacks due to drought, which has heavily impacted agricultural productivity and resulted in electricity shortages. The IMF projects Zambia's real GDP growth for 2024 to drop to 1.2%, a sharp decline from an earlier 2.3% estimate in June. Inflation has surged to 15.7% in October, primarily driven by rising food prices and currency devaluation, far exceeding the target range of 6-8%.

(With inputs from agencies.)