Press Release No. 24/148

IMF Staff Completes Mission to Zambia

May 9, 2024

• An IMF team visited Lusaka from April 24 to May 7 to discuss recent economic and financial developments, as well as economic policies that could underpin the Third Review of the IMF Extended Credit Facility.
• The team had productive discussions with the authorities. Discussions will continue virtually in the coming weeks, including to better assess the economic impact of the drought and agree on policies to support the completion of the ECF review.
• Reform efforts will continue to focus on sustaining macroeconomic stability and restoring fiscal and debt sustainability, while addressing the humanitarian relief required by the drought.

Washington, DC: An International Monetary Fund (IMF) mission team led by Ms. Vera Martin visited Lusaka from April 24^th to May 7^th, 2024, to discuss economic and financial policies that could underpin the approval of the Third Review under the Extended Credit Facility (ECF)-supported arrangement.

At the end of the mission, Ms. Vera Martin issued the following statement:

“The Zambian authorities and IMF staff advanced the technical work as part of their discussions for the Third Review under the Extended Credit Facility. Discussions focused on analyzing recent economic developments and assessing the economic impact of the drought.

“Growth in 2024 is now projected at [2.3] percent, while inflation pressures persist driven by external supply factors and the depreciation of the exchange rate.

“There was agreement between the IMF staff and the Zambian authorities on the need to durably sustain macroeconomic stability and restore fiscal and debt sustainability in line with program parameters. Against continued uncertainty, agile policymaking will be paramount to respond to the impact of the drought while maintaining external buffers.

“The Zambian authorities have made commendable progress in implementing crucial reforms under the Fund-supported program, including significant fiscal efforts in 2023 despite lower mining revenues. Despite the consolidation, authorities have upscaled social spending to support the most vulnerable and continue to provide free primary education. Near-term reform priorities should focus on permanent revenue measures and better cash and liability management that would reduce the financing needs crucial to restore fiscal space and debt sustainability. In addition, strengthening tax administration, removing tax exemptions, and actively combating tax evasion can also boost revenues and improve governance. Continued progress in enhancing transparency and advancing governance reforms, particularly within the energy sector, is essential.

““Discussions will continue virtually in the coming weeks toward completion of the Third ECF review. The team would like to thank the Zambian authorities for their cooperation, hospitality, and constructive discussions.”