- Zambia has made substantial progress in restoring macroeconomic stability under the recently completed IMF-supported program. Public external debt has been largely restructured, international reserves have strengthened, growth has picked up, and inflation has continued to decline.
- Growth projections for 2025 and 2026 have been revised downward and fiscal pressures are emerging. Staff emphasized the need to transparently incorporate all spending pressures into the fiscal framework, supported by credible contingency measures, while preserving the hard-won stabilization gains achieved under the program.
- The authorities expressed interest in a successor arrangement with the IMF. Initial technical discussions could begin as early as late April, with more engagement expected after the general elections once a new government is in place which would allow for greater clarity on policy priorities.
Lusaka, Zambia: An International Monetary Fund (IMF) staff team, led by Edward Gemayel, visited Zambia from February 26 to March 4, 2026, as part of the Fund's regular engagement with the Zambian authorities and other stakeholders.
At the conclusion of the visit, Mr. Gemayel issued the following statement:
"The IMF team held constructive discussions with the Zambian authorities on recent macroeconomic developments, the evolving outlook, and policy priorities for the period ahead. Zambia has made substantial progress in restoring macroeconomic stability under the recently completed IMF-supported program. Public external debt has been largely restructured, international reserves have strengthened, growth has picked up, and inflation has continued to decline—recently reaching the Bank of Zambia's target band. These outcomes reflect sustained reform efforts and have helped reinforce Zambia's credibility with creditors and market participants.
"The economic outlook remains positive, although downside risks have increased amid domestic challenges and heightened global uncertainty. Growth for 2025 has been revised downward to 4.5 percent, reflecting weaker-than-expected performance in the mining sector, softer wholesale trade, and continued energy-related constraints on non-mining activities. The moderation in growth projected for 2026, at 5.5 percent, reflects a normalization of agricultural output following last year's bumper harvest. Rising global oil prices and elevated geopolitical tensions could exert renewed pressure on inflation and the exchange rate. Should these persist, appropriate domestic price adjustments to higher international oil prices would help mitigate potential losses in fuel tax revenues. Against this backdrop, building buffers and preserving policy discipline will be essential.
"The mission also discussed emerging fiscal pressures. While the 2026 budget framework targets a strong primary surplus, early signs of slippage have begun to emerge, reflecting spending pressures related to the wage bill, government support to the agricultural sector, and election‑related expenditures. In this context, the scale and financing of the Food Reserve Agency's operations will require careful management to avoid the reemergence of quasi‑fiscal risks. Absent corrective measures, the 2026 primary surplus is projected to fall by about 1 percentage point of GDP relative to the 3.8 percent of GDP envisaged at the last review under the recently completed ECF‑supported program.
"IMF staff underscored the importance of transparently integrating all spending pressures into the fiscal framework, supported by appropriate contingency measures, and of preserving the hard‑won gains achieved under the program. Fiscal structural reforms should remain focused on strengthening revenue and customs administration to broaden the tax base and support a more progressive, equitable, and less complex tax system.
"The authorities reiterated their interest in a successor arrangement. Staff emphasized that the next phase of engagement should focus on further strengthening macroeconomic stability and advancing reforms to improve the business climate and support private sector‑led growth. In this context, staff noted that initial discussions could begin as early as late April. However, in light of the electoral calendar, discussions would be expected to resume only after the general elections later this year and after a new government is in place, which would allow for greater clarity on policy priorities.
"The IMF team would like to thank the Zambian authorities and all stakeholders for their open and constructive engagement. The Fund remains committed to supporting Zambia's reform efforts and the preservation of macroeconomic stability.
"During this visit, the team met with the President of the Republic of Zambia, Hakainde Hichilema, Finance Minister Musokotwane, Bank of Zambia Governor Kalyalya, senior government officials, and representatives of CSOs and development partners."
