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IMF Sees Next Zambia Payment in December After Staff-Level Deal

Pedestrians at a bus station in Lusaka, Zambia, on Friday, Feb. 23, 2024. Zambia’s currency is in its longest winning streak in nearly a year, supported by an unexpectedly large interest-rate hike and a decree that local banks hold back more funds in reserve. Photographer: Luke Dray/Bloomberg (Luke Dray/Bloomberg)

(Bloomberg) -- The International Monetary Fund’s board expects to meet by mid-December to conclude the fourth review of an Extended Credit Facility arrangement Zambia, after the IMF reached a staff-level agreement with the southern African nation.

The conclusion of the fourth review will pave the way for the disbursement of $185.5 million under a 38-month IMF-supported program, the Washington-based lender said in a statement.

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The IMF revised downwards Zambia’s economic growth projections for 2025 to 6.2% from 6.6%, because of weak electricity output.

“This outlook is bolstered by a recovery in agricultural and mining production and the completion of the debt restructuring and is underpinned by prudent policies and ongoing reforms,” IMF mission chief Mercedes Vera Martin said in the statement.

The fund also said Zambia’s dedollarization plans “should be accompanied by market-driven incentives once macroeconomic stability is consolidated, hedging instruments to manage exchange rate risks are available to the private sector, and prudential regulation is in place to help internalize financial risks associated with dollarization,” the fund said.

The Bank of Zambia has been holding consultations on draft currency regulations that would criminalize the use of foreign currencies in domestic transactions.

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