An International Monetary Fund (IMF) mission team, led by Vera Martin, concluded a visit to Lusaka, Zambia. The visit from April 29 to May 13 involved discussions with Zambian authorities about economic and financial policies for the completion of the Fifth Review under the Extended Credit Facility (ECF) arrangement. Discussions also covered the 2025 Article IV Consultation.
Vera Martin stated that "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." She added that "discussions will continue in the coming weeks to finalize the policies and reforms underpinning this review."
Zambia's economy is showing resilience despite facing economic shocks. Growth is expected to improve in 2025 due to an anticipated rebound in agriculture and increased mining activity. However, challenges like slow recovery in electricity generation may hinder this progress, highlighting a need for reforms in the energy sector.
In 2024, Zambia's fiscal primary balance was estimated at 2.9 percent of GDP, surpassing expectations through constrained financing and spending compression. Nonetheless, spending pressures are emerging for 2025 due to rising debt service and social spending needs. Mobilizing domestic revenues remains crucial for maintaining fiscal sustainability.
The authorities are committed to enhancing public financial management and fiscal transparency while improving tax administration. Reforms aimed at reducing tax expenditures, making the tax regime more progressive, and improving expenditure controls are deemed essential for building fiscal resilience.
Inflation is projected to decline gradually throughout the year as food and fuel prices ease. The Bank of Zambia is encouraged to maintain a data-driven monetary policy stance to bring inflation towards its target band while ensuring macroeconomic stability.
Despite global policy uncertainty posing challenges, Zambia faces risks such as subdued global demand and commodity price volatility. Continuing reform efforts is vital for building resilience, creating fiscal space, and attracting private investment. Accelerating structural reforms in areas like energy sector governance, public procurement, and business environment can unlock growth potential and support job creation.