- IMF staff and the Zambian authorities have reached a staff-level agreement on the sixth and final review under the 38-month Extended Credit Facility (ECF) arrangement.
- The authorities have made significant progress toward key economic objectives, including eliminating macroeconomic imbalances, rebuilding reserves, and promoting reforms towards economic transformation.
- Sustaining responsible policies and reform momentum in the runup to the 2026 elections will be essential to entrench macroeconomic stability, build further economic resilience, and promote more inclusive growth.
Washington, DC: An IMF team led by Ms. Mercedes Vera Martin, Mission Chief for Zambia, visited Lusaka from October 22 to November 4, 2025, to conduct discussions for the sixth and final review under the ECF arrangement. Follow-up discussions were held virtually from Washington D.C. Given productive discussions with the Zambian authorities, Ms. Vera Martin issued the following statement:
"We are pleased to announce that IMF staff and Zambian authorities have reached a staff-level agreement on policies to complete the Sixth and final Review of Zambia's 38-month ECF arrangement. Subject to approval by the IMF Executive Board, Zambia will receive a disbursement of SDR 138.9 million (about $190 million), bringing total disbursement to SDR 1,271.66 million (about $1.7 billion) since August 2022.
"Despite external and domestic shocks during the program period, Zambia has significantly reduced macroeconomic imbalances, reached agreement on most of the external debt under the perimeter of the debt restructuring, and undertaken sustained fiscal consolidation while safeguarding social spending. The authorities have restored macroeconomic stability and built buffers that have improved economic resilience to shocks.
"The Zambian economy has continued to expand in the first half of 2025, with real GDP growth projected at 5.2 percent in 2025, reflecting lower-than-expected mining and wholesale and retail trade. Inflationary pressures are easing—although more gradually than envisaged— supported by a stronger kwacha, lower fuel prices, and improved food supply. Despite favorable terms of trade, including higher-than-projected international copper prices, the current account deficit is projected to widen to about 2.1 percent of GDP in 2025 driven by broad-based import growth and lower official grants. Gross international reserves continue to increase and are expected to cover 4 months of prospective imports by end-2025.
"Notwithstanding heightened global uncertainty, the medium-term outlook remains favorable. Growth is projected to average 5.6 percent in 2026-31 underpinned by investment, robust agriculture production, and improved electricity generation. Inflation is projected to converge gradually toward the 6-8 percent target band by 2027. The current account would rebound to an estimated surplus of 1.7 percent of GDP in 2026 and gradually increase to about 3.2 percent of GDP by 2030, amid expanding copper production and elevated copper prices. Risks are tilted to the downside, with heightened uncertainty around the baseline.
"Fiscal performance remains strong supported by non-mining revenues and lower spending mostly reflecting lower external disbursement, while social spending has increased in line with government's priorities. The 2025 primary surplus is projected at 2.2 percent of GDP, including repayment of fuel arrears. Revenues, excluding grants, are projected to reach 22.6 percent of GDP despite accelerated VAT refunds to clear legacy arrears. Given the high risk of debt distress, maintaining fiscal discipline and containing new borrowing remain critical for debt sustainability. In this vein, IMF staff welcomes the authorities' commitment to maintain a prudent fiscal stance through 2026, while protecting social spending. Continued efforts to enhance public financial management, including by revamping the fiscal framework, and improve revenue mobilization, through strengthening compliance and expanding the tax base, remain essential to generate fiscal space to support growing spending needs, including infrastructure, in line with the authorities' objectives. It is also important to ensure cost-recovery electricity pricing and strengthen SOE governance to limit fiscal risks."
"A carefully calibrated monetary policy is needed to anchor inflation expectations and preserve price stability. The real policy rate is expected to increase in the coming months as inflation decelerates, hinting toward a tighter monetary policy stance. However, if the inflation decline becomes more gradually than initially envisaged, there are merits in maintaining a prudent approach for further monetary policy easing. Efforts to improve the operational monetary framework remain critical to strengthening monetary transmission. While allowing for exchange rate flexibility, the BoZ should scale up efforts to accumulate net international reserves, especially taking advantage of supportive FX liquidity conditions. The team welcomes legislative initiatives to revamp the financial supervision and resolution, including a new deposit insurance framework."
"Pressing ahead with structural reforms is paramount to boost inclusive and private sector-led growth. Despite some progress on structural reforms, improving governance, including by setting up a merit-based transparent process for the selection of the Board of the Anti-Corruption Commission, will help enhance accountability and facilitate the role of the private sector in the economy. Energy sector reforms continue to advance. As open access to the TAZAMA pipeline is rolled out, consistent and transparent application of the guidelines, anchored in private sector participation, will be key to ensuring the reform delivers its expected gains."
"The IMF mission team met with Minister of Finance and National Planning Dr. Situmbeko Musokotwane, Governor of the Bank of Zambia, Dr. Denny Kalyalya, Secretary to the Treasury Mr. Felix Nkulukusa, Deputy Governor Dr. Francis Chipimo and other senior Government officials, as well as representatives of the private sector, civil society, and development partners. The team expresses its sincere appreciation to the Zambian authorities for their close cooperation."
