Zambia will work on a new programme with the International Monetary Fund (IMF) instead of seeking to extend its loan agreement that expires at the end of the month, the finance ministry said on Thursday.

The government had previously considered a one-year extension to its Extended Credit Facility, which would have been worth roughly $145-million in additional funding.

However, the Zambian government confirmed its decision to shift to a full successor programme instead.

"This decision should be understood as a reflection of programme completion of the current one and transiting on to a successor programme," the Ministry of Finance said in a statement. "The decision should not be misunderstood to mean disengagement or any weakening of reform commitment."

The existing programme was established in 2022 to help Zambia regain debt sustainability following its 2020 default and is scheduled to have its sixth and final review by the IMF's executive board this month.

On Wednesday, the IMF said that Zambia had dropped plans for extending the programme, which weighed on the country's bonds on Thursday morning.

The bonds trimmed some of their losses in the wake of the announcement the southern African country would seek a full programme.

By 1106 GMT, Zambia's dollar bond maturing in December 2053 was bid 0.4 cents lower at 72.13 cents on the dollar, Tradeweb data showed.

The IMF estimates Zambia's economy to have grown by 5.8% in 2025 and expects inflation to return to the central bank's target range of 6-8% within two years.

Talks with the IMF regarding the new programme are expected to start shortly after the ECF's conclusion.

President Hakainde Hichilema, facing elections in August amid persistently high inflation, is seeking to maintain policy stability during this transition and reaffirmed the government's commitment to economic reforms.