- The IMF team had productive discussions with the Zambian authorities on economic performance and policies underpinning the Fifth Review under the IMF Extended Credit Facility (ECF) arrangement.
- Zambia's recovery is gaining pace, with growth set to strengthen in 2025. Sustaining progress in a volatile environment requires stronger buffers and accelerated structural reform implementation.
- Discussions will continue towards reaching a staff-level agreement on the review, including to address new spending needs and allow Zambia to respond to emerging challenges while restoring debt sustainability.
Washington, DC: An International Monetary Fund (IMF) mission team led by Ms. Vera Martin visited Lusaka from April 29 to May 13, and held productive discussions with the Zambian authorities on economic and financial policies that could underpin the completion of the Fifth Review under the ECF arrangement. The visit also entailed discussions under the 2025 Article IV Consultation.
At the end of the mission, Ms. Vera Martin issued the following statement:
"The Zambian authorities and IMF staff have advanced the technical work and policy discussions as part of the Fifth Review under the Extended Credit Facility. Discussions will continue in the coming weeks to finalize the policies and reforms underpinning this review.
"Zambia's economy has shown encouraging resilience despite economic shocks. Growth is expected to strengthen in 2025, supported by an anticipated rebound in agriculture and a pickup in mining activity. However, a slow recovery in electricity generation and electricity shortages could undermine the rebound, underscoring the need for sustained reforms in the energy sector.
"The fiscal primary balance in 2024, estimated at 2.9 percent of GDP, outperformed expectations, marked by constrained financing and spending compression. Yet, spending pressures are emerging in 2025 due to rising debt service and social spending needs. Mobilizing domestic revenues, in the context of constrained financing conditions, remains critical to preserving fiscal and debt sustainability and safeguarding priority social and infrastructure spending.
"The authorities remain committed to improving public financial management and fiscal transparency, while enhancing tax administration. Reforms to reduce tax expenditures, to make the tax regime more progressive, and improve expenditure controls are essential to build additional fiscal resilience.
"Inflation is projected to gradually decline over the course of the year, reflecting expected easing in food and fuel prices. The Bank of Zambia should continue to maintain a data-driven and forward-looking monetary policy stance to bring inflation on a downward trend towards the inflation band while supporting macroeconomic stability.
"Given extremely high levels of global policy uncertainty, the external environment remains challenging, with downside risks to the growth outlook arising from subdued global demand, elevated commodity price volatility, and declining official development support. Continuing the reform momentum is essential to build resilience, create fiscal space, and crowd in private investment. Structural reforms in the energy sector, governance, public procurement, and the business environment should be accelerated to unlock Zambia's growth potential and support job creation.
