By 
The International Monetary Fund (IMF) has cautioned that Zambia’s economic rebound in 2025 could be undermined by slow recovery in electricity generation and ongoing power shortages, emphasizing the urgent need for sustained reforms in the energy sector.
IMF Mission Chief for Zambia, Mercedes Vera-Martin, said structural reforms in energy, governance, public procurement, and the business environment must be accelerated to unlock the country’s growth potential and support job creation.
In a statement issued on Saturday, Martin noted that Zambia’s economy had shown resilience despite multiple economic shocks, with growth expected to strengthen in 2025—driven by an anticipated rebound in agriculture and increased mining activity.
“The fiscal primary balance in 2024, estimated at 2.9 percent of GDP, outperformed expectations, marked by constrained financing and spending compression,” Martin said.
However, she warned that spending pressures were expected to increase in 2025 due to growing debt servicing obligations and rising social spending needs.
Martin emphasized that mobilizing domestic revenue remains critical in the context of limited financing options, to ensure fiscal and debt sustainability while protecting priority social and infrastructure investments.
“The authorities remain committed to improving public financial management and fiscal transparency, while enhancing tax administration,” she added.
Martin said ongoing reforms to reduce tax expenditures, make the tax system more progressive, and tighten expenditure controls were essential for building fiscal resilience.
Inflation is projected to gradually decline in 2025, aided by expected reductions in food and fuel prices. Martin advised that the Bank of Zambia maintain a data-driven and forward-looking monetary policy to steer inflation toward the target band while safeguarding macroeconomic stability.
While the external environment remains difficult—amid global policy uncertainty, subdued global demand, commodity price volatility, and declining development aid—she said continuing the reform agenda was essential to build resilience, create fiscal space, and attract private investment.
Read More: Moody’s warns of indirect risks to African banks from U.S.-China trade tensions
“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,” Martin said.
The IMF team, led by Martin, visited Lusaka from April 29 to May 13, 2025, for discussions under the Fifth Review and the 2025 Article IV Consultation.
During the mission, the team met with President Hakainde Hichilema, Finance and National Planning Minister, Dr. Situmbeko Musokotwane, Bank of Zambia Governor Dr. Denny Kalyalya, and Secretary to the Treasury Felix Nkulukusa, among others.
Engagements also included Deputy Governor Dr. Francis Chipimo, senior government officials, private sector leaders, civil society representatives, and development partners.
WARNING! All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express permission from ZAMBIA MONITOR
Comments