Financing the Economic Stabilization and Growth Programme (Zambia Plus) in the Shadow of the IMF

This policy paper was prompted by a protracted deliberation between the Zambian Government and the International Monetary Fund (IMF) regarding a Fund-supported economic programme. The Zambian authorities began contemplating an IMF “bailout package” in late 2015 in the wake of macroeconomic instabilities and growth slowdown that emerged during that year. The initial exploratory talks between the two parties in late 2015 and early 2016 were cordial. However, they were intermittently impeded because the build-up to the August 2016 general elections naturally gave rise to political uncertainties, taking attention away from talks of IMF support. Thus, for several months between late 2015 and 2017, the talks dragged on without a conclusion. By the close of 2017, the issue of an IMF deal was still in abeyance. In February 2018, the IMF announced that it had declined the second request from Zambia because the borrowing plans of the authorities were still too ambitious and threatened to further escalate the already heightened risk of debt distress. Discussions towards a Fund-supported programme were suspended, but the IMF left the door open to engage with Zambia through regular Article IV discussions and technical assistance. The Zambian Government did not offer any official statement reacting to the IMF position or specifying a counter-strategy to bring the discussions back on course.