An International Monetary Fund (IMF) team, led by Ms. Mercedes Vera Martin, IMF Mission Chief for Zambia, conducted discussions in Lusaka from April 29 to May 13, 2025. The purpose was the 2025 Article IV Consultation and the Fifth Review under the Extended Credit Facility (ECF). Subsequent discussions continued virtually.
Ms. Vera Martin stated, "The Zambian authorities and the IMF team reached a staff-level agreement on economic policies and reforms for the Fifth Review under the ECF arrangement. The agreement is subject to approval by IMF management and the Executive Board in the coming weeks. Once approved by the Executive Board, Zambia will gain access to SDR 139.9 million (about US$194 million) in financing."
In 2024, Zambia's economy showed resilience despite challenges like a severe drought and global headwinds. Real GDP growth was estimated at 4 percent in 2024, driven by stronger-than-expected mining and non-mining activity, particularly in ICT, financial services, and construction sectors. Fiscal performance was tighter than planned with a primary surplus of 2.9 percent of GDP due to spending compression amid tight financing conditions.
"Growth momentum is expected to continue in 2025," Ms. Vera Martin noted, "with real GDP growth projected at 5.8 percent." Economic activity is anticipated to be supported by increased agricultural output and copper production alongside a gradual recovery in electricity generation.
Inflation averaged 15 percent year-on-year in 2024 due to higher food prices and kwacha depreciation but has started easing partly due to policy rate hikes since February 2025.
"The overall fiscal balance is expected to widen to 5.3 percent of GDP," according to Ms. Vera Martin, with higher debt service and new social spending needs adding fiscal pressures. Authorities have committed to revising the budget for additional revenue measures and expenditure reprioritization.
Ms. Vera Martin emphasized that inflation is projected to gradually decline as food and fuel prices ease but highlighted the need for vigilance given persistent inflationary pressures.
"Accelerating reform implementation is needed," she said, stressing improvements in business environment governance are critical for investor confidence.
During their visit, the IMF team met with key Zambian figures including President Hakainde Hichilema; Minister of Finance Dr. Situmbeko Musokotwane; Governor of the Bank of Zambia Dr. Denny Kalyalya; among others from various sectors.
"The IMF team extends its sincere gratitude," concluded Ms. Vera Martin, acknowledging constructive engagement throughout their mission.