[{"bbox": [96, 153, 1135, 522], "category": "Text", "text": "The agreement provided much-needed breathing space for Zambia by unlocking not only IMF, but also World Bank (WB) funding in the amount of USD 2.6 billion and providing a basis for the debt re-structuring discussions needed to close the remaining financing gap of USD 8.4 billion. Key in the agreement was that bilateral creditors had given so-called 'financing assurances', which effectively means that bilaterals involved agree on the contours of the needed debt restructuring. Negotiations are based on a joint WB/IMF debt sustainability analysis which outlines the parameters of a debt relief envelop that would help restore debt sustainability. The details (size of haircut, extension of maturity, or reduction of interest rates) for both official and private external creditors to bring the present value of external debt-to-exports ratio to 84% (a level deemed to bring the country back to a 'moderate risk of debt distress' for Zambia) remain to be finalized. Given the diverse nature of Zambia's external debt (52% to commercial creditors, a third to China), and the gaps in the Common Framework debt restructuring architecture, delays in translating the financing assurances into legally binding bilateral creditor-by-creditor agreements, are expected. Reaching a debt restructuring deal that, includes the most important bilateral creditor - China, is a top priority and key challenge for the GRZ as it will pave the way for support from the international financial institutions and increase investor confidence."}, {"bbox": [96, 535, 1135, 693], "category": "Text", "text": "In April 2023, during the First ECF Review mission (and article IV consultations), the IMF is reporting strong performances of the Government in the implementation of the ECF backed programme, despite the challenging context of a global economic turmoil. The Government of the Republic of Zambia (GRZ) has formally met all Structural Benchmarks, Quantitative Performance Criteria and Indicative Targets. A Staff Level Agreement has thus been reached. The IMF board approval is now needed to unlock the financial resources that go with the conclusion of the first review."}, {"bbox": [96, 708, 1125, 758], "category": "Text", "text": "In conclusion, the authorities are pursuing a stability-oriented macroeconomic policy and the eligibility criterion is met."}, {"bbox": [85, 787, 437, 814], "category": "Section-header", "text": "### 2.3.3 Public Financial Management"}, {"bbox": [96, 829, 1135, 1095], "category": "Text", "text": "Since the early 2000s, Zambia has embarked on a series of successive PFM reforms to improve transparency, accountability and efficiency in the management of public resources. The PFM reforms are anchored at the Ministry of Finance and National Planning (MoFNP), but are also key to line ministries, accountability agencies (e.g. the Office of the Auditor General), and the National Assembly. PFM has been under intense scrutiny. With cooperating partners' support, a number of PFM-related diagnostics carried out in the past few years, including the Public Expenditure & Financial Accountability Assessment (PEFA), the Tax Administration Diagnostic Assessment Tool (TADAT), the Public Investment Management Assessment (PIMA), the Supreme Auditing Institutions Performance Management Framework (SAI PMF), the Report on Observance of Standards and Codes, Accounting and Auditing (ROSC A&A), the Methodology for Assessing Procurement Systems (MAPS), and a Debt Management Performance Assessment (DeMPA)."}, {"bbox": [96, 1107, 1135, 1317], "category": "Text", "text": "The fourth PEFA assessment, published in 2017 (earlier assessments were done in 2005, 2008, 2012), reported relatively strong performance for almost all the performance indicators (PIs) for policy-based fiscal strategy and budgeting, and external scrutiny and audit. However, there was relatively poor performance for almost all PIs for management of assets and liabilities, and predictability and control in budget execution. Budget reliability, transparency of public finances, and accounting & reporting showed mixed results. Important deviations between approved budgets and actual expenditures were still reported¹⁶ and the aggregate actual expenditure were often significantly higher compared to the approved budget. Budget releases were often delayed and payment arrears accumulated."}, {"bbox": [96, 1331, 1135, 1516], "category": "Text", "text": "To address some of these constraints, a number of reforms have been implemented to strengthen the legal framework, support systems and PFM institutions to further enhance planning, budgeting and expenditure control. The reform of the legal framework includes the enactment of the National Planning and Budgeting Act (NPBA 2020) and the revision of the Public Finance Management Act (2018), and the Public Procurement Act (2020). The NPBA, enacted in October 2020, prescribes a multi-year planning and budgeting framework including a National Development Plan, a Medium-Term Expenditure Framework (MTEF), and output-based budgeting (OBB)."}, {"bbox": [96, 1529, 1135, 1583], "category": "Text", "text": "The change in government in August 2021 has generated high expectations, both in an economic and political terms. The change in government presents a window of opportunity to substantially reform PFM in Zambia. The"}, {"bbox": [85, 1621, 929, 1646], "category": "Footnote", "text": "¹⁶ Under PI-2, “Variance in expenditure composition during last 3 years” scored D in the 2012 PEFA."}, {"bbox": [1027, 1681, 1144, 1705], "category": "Page-footer", "text": "Page 12 of 33"}]