By 
The Zambian Kwacha continued its record-breaking rally after authorities signalled a strategic shift toward negotiating a fresh International Monetary Fund (IMF) programme rather than extending the current Extended Credit Facility (ECF), boosting investor confidence across currency and bond markets.
The local unit extended its 16-day appreciation streak, cementing its position as the world’s best-performing currency, with gains of more than 10 percent against the US dollar since early December.
The Kwacha’s is now trading at its strongest level in over two years.
Zambia’s dollar-denominated bonds also rallied, reflecting growing market confidence in the government’s reform agenda despite the transition between IMF programmes.
Market analysts attributed the surge to a combination of strong external and domestic factors.
In a market commentary, Access Bank Group said the rally reflects “a confluence of supportive factors,” including record copper prices exceeding US$13,000 per tonne, aggressive dollar selling following the central bank’s late-December directive restricting foreign currency use in domestic transactions, and increased corporate dollar conversions ahead of the tax payment deadline.
Finance and National Planning Minister, Situmbeko Musokotwane, confirmed on Thursday that negotiations for a successor IMF arrangement will begin immediately after the current programme concludes later this month.
The existing IMF facility, agreed in 2022, was designed to restore debt sustainability following Zambia’s 2020 sovereign default.
While IMF programmes are rare in election years, Zambia faces a practical deadline to secure agreement by May, before Cabinet dissolves ahead of the August presidential elections.
The forthcoming IMF programme is expected to prioritise inclusive growth and energy-sector resilience, while maintaining fiscal discipline.
Zambia is targeting its lowest budget deficit since 2011, supported by improved revenue performance and tighter expenditure controls.
Strong copper prices continue to underpin Zambia’s external position, boosting export earnings and foreign exchange inflows.
Together with the completion of debt restructuring and continued IMF engagement, these factors provide a solid foundation for the kwacha.
Analysts say the currency’s outlook remains favourable, provided reform commitments are sustained through the political cycle and confidence in policy continuity is maintained.
WARNING! All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express permission from ZAMBIA MONITOR.
Comments