IMF to Zambia: restore TAZAMA open access — fuel premium halved when it ran

LUSAKA — The International Monetary Fund is urging Zambia to restore the TAZAMA pipeline open-access framework, suspended in response to the Middle East conflict, after disclosing that the framework had cut fuel-import premia by approximately 50% while it operated.

The call, in a staff statement released by IMF Media Officer Wafa Amr, came alongside the Fund's first detailed read on priorities for a successor Extended Credit Facility programme.

Mission chief Edward Gemayel was explicit about the cost of the suspension.

In response to the conflict in the Middle East, the authorities suspended the TAZAMA open-access framework. Prior to its suspension, the framework had reduced fuel import premium by approximately 50 percent, underscoring the role of competition in lowering supply costs. The mission urged the authorities to restore the TAZAMA open access framework, publish the terms of emergency procurement arrangements, and ensure that transparent monthly fuel import auctions become operational as soon as conditions allow.

— Edward Gemayel, IMF staff team leader, in a statement released by the Fund

The macro scorecard: where Zambia stands

The statement set out the achievements of the just-completed ECF programme in unusual detail. Gross international reserves stand at US$6.4 billion, equivalent to 4.4 months of prospective imports of goods and services. Inflation declined to 6.8% in April 2026, returning to the Bank of Zambia's 6–8% target band, supported by kwacha appreciation and moderating food prices. The 2025 primary surplus reached 3.1% of GDP.

On debt restructuring, Gemayel said agreements now cover approximately 94% of the restructuring perimeter — a figure that includes the Israel bilateral signed in Lusaka on 12 May.

Growth has been revised down to 4.3% for 2026, the statement said, reflecting weaker mining output, a normalisation of agricultural production after the exceptional 2025 harvest, softer trade activity, energy constraints and spillovers from the war in the Middle East. Year-end inflation is projected at 8.5%, as higher fuel prices partly offset the disinflationary effect of kwacha appreciation. The current account is projected to swing to a surplus of 1.5% of GDP.

Fiscal pressures have intensified

The Fund did not hide its concern on the fiscal picture. The 2026 primary surplus is now projected at 1.1% of GDP, compared to 3.8% at the time of the Sixth Review of the completed ECF programme.

The deterioration reflects weaker tax collection, including from the suspension of fuel VAT and excise duties, spending pressures in the run-up to the elections, a civil service wage adjustment, and agricultural subsidy overruns of about 1.3 percent of GDP. In addition, significant fiscal risks stemming from the Food Reserve Agency will require decisive mitigating measures.

— Edward Gemayel

Domestic VAT collection continues to underperform, the Fund said, reflecting structural and administrative weaknesses at the Zambia Revenue Authority. The accumulation of VAT-refund backlogs is also weighing on taxpayer compliance.

Monetary policy: cut welcomed, but watch the Middle East

On the Bank of Zambia's recent Monetary Policy Rate cut, Gemayel said it reflected an improved inflation outlook but cautioned on calibration.

Careful calibration of the interest rate path remains essential, particularly in light of recent fuel price increases and heightened global uncertainty. The BoZ should remain guided by forward-looking inflation forecasts and alert to upside risks, including from the Middle East conflict.

— Edward Gemayel

The Fund recommended maintaining external reserves at around five months of prospective imports — slightly above the current 4.4-month buffer.

Background

TAZAMA Pipelines is jointly owned by the governments of Tanzania and Zambia. The 1,710-kilometre line runs from Dar es Salaam on the Indian Ocean to the Indeni Petroleum Refinery near Ndola and is the principal corridor for petroleum imports into landlocked Zambia. The open-access framework was introduced to allow third-party fuel marketers to use the pipeline on regulated terms; the IMF's 50% premium-reduction figure is the cleanest public quantification of its impact to date.

On a successor Extended Credit Facility, the Fund said priorities had been identified. The authorities aim to consolidate macroeconomic stability while shifting toward more inclusive and private-sector-led growth, with a view to advancing economic diversification and raising productivity through non-distortive industrial policies. Enhancing copper value addition, alleviating energy supply constraints, and improving the attractiveness of agribusiness, tourism and textiles would, the Fund said, support domestic value addition and generate jobs.

What to watch

Three near-term tests. First, whether the Ministry of Energy publishes the emergency procurement terms ahead of the next IMF mission or programme review. Second, whether open access is restored — and if so, whether the regulatory framework changes from the pre-suspension regime. Third, whether the Bank of Zambia's next rate decision treats Middle East fuel-price risk as the dominant upside threat to the inflation target. The next IMF mission statement will be the cleanest read.

Frequently Asked Questions

These are the questions readers have been asking since the IMF statement. Short answers follow, drawn from the IMF Media Office statement.

What is TAZAMA and what is open access?

In short, TAZAMA Pipelines is the Tanzania-Zambia crude-oil pipeline operator, jointly owned by the two governments. The key is that open access — the framework allowing third-party fuel marketers to use the pipeline on regulated terms — had cut fuel-import premia by approximately 50% before its suspension.

Why was open access suspended?

Simply put, the Zambian authorities suspended it in response to the conflict in the Middle East. According to Gemayel, consolidating procurement under emergency arrangements was the stated rationale.

What is the IMF asking for?

The answer is three things: restore the open-access framework; publish emergency-procurement terms; ensure transparent monthly fuel-import auctions become operational as soon as conditions allow. Research from past programme conditions shows transparency on emergency procurement is a recurring IMF ask.

What macro figures did the IMF release?

According to the Fund's statement, reserves are at US$6.4 billion (4.4 months of imports), April inflation was 6.8%, the 2025 primary surplus was 3.1% of GDP, and 94% of the debt restructuring perimeter is now covered. Evidence from the statement reveals 2026 growth has been revised down to 4.3%, year-end inflation is projected at 8.5%, and the current account is projected to swing to a 1.5%-of-GDP surplus.

What are the IMF's fiscal concerns?

In other words, the 2026 primary surplus has been revised to 1.1% of GDP, from 3.8% at the previous review. Analysis from Gemayel attributes the deterioration to weaker tax collection (including the suspension of fuel VAT and excise duties), pre-election spending pressures, a civil-service wage adjustment, and agricultural-subsidy overruns of about 1.3% of GDP. Food Reserve Agency risks are separately flagged.

Sources

IMF Media Office: staff statement released by Wafa Amr, 15 May 2026.