Zambia Courts IMF Confidence as Reform Crossroads Near
Africa's second largest copper producers fiscal discipline wins praise, but rising debt service, power constraints, and global uncertainty demand deeper reform commitments.
Zambia’s macroeconomic recovery is gaining traction, but the road to stability remains paved with structural challenges. Following a two-week mission to Lusaka, the International Monetary Fund (IMF) has acknowledged commendable policy progress under Zambia’s $1.3 billion Extended Credit Facility (ECF), while urging deeper reforms to fortify the economy against lingering vulnerabilities.
“The Zambian authorities and IMF staff have advanced the technical work and policy discussions,” said IMF Mission Chief Mercedez Vera Martin. “Discussions will continue in the coming weeks to finalize the policies and reforms underpinning this review.”
The IMF projects Zambia’s GDP to strengthen in 2025, bolstered by a recovery in agriculture and mining. However, continued electricity shortages, a byproduct of constrained hydropower generation, pose a real threat to momentum. Reforms in the energy sector remain critical.
Zambia’s 2024 primary fiscal surplus of 2.9% of GDP beat expectations, driven by spending compression amid constrained financing. Yet, with debt service and social pressures rising in 2025, the IMF highlights the urgent need to mobilize domestic revenues and reform tax expenditures to sustain fiscal and debt sustainability.
Inflation is expected to decline gradually, supported by anticipated easing in food and fuel prices. The Bank of Zambia’s forward-looking monetary policy earned praise from the IMF, though vigilance remains essential amid global volatility.
The Fund also flagged risks from declining global development support, subdued demand, and commodity price volatility. It stressed the importance of accelerating reforms in governance, procurement, and the broader business environment to crowd in private investment and drive job creation.
Meetings during the mission included President Hakainde Hichilema, Finance Minister Dr. Situmbeko Musokotwane, Bank of Zambia Governor Dr. Denny Kalyalya, and stakeholders across government, civil society, and the private sector, underlining the broad-based commitment required to steer Zambia toward economic resilience.
As the Fifth Review under the ECF arrangement awaits completion, Zambia stands at a crucial juncture. Continued reform momentum, execution discipline, and policy credibility will be vital to unlock long-term growth and investor confidence in an increasingly uncertain global landscape.