IMF Staff Completes Mission to Zambia

IMF News, May 9, 2024

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Growth projection for 2024: 2.3 percent.
Inflation: Pressures persist driven by external supply factors and the depreciation of the exchange rate.
Assessment focus: Analyzing recent economic developments and assessing the economic impact of the drought.

Agreed macro objectives:
- Durably sustain macroeconomic stability.
- Restore fiscal and debt sustainability in line with program parameters.
Near-term policy priorities emphasized by IMF staff:
- Adopt permanent revenue measures.
- Improve cash and liability management to reduce financing needs and restore fiscal space and debt sustainability.
- Strengthen tax administration.
- Remove tax exemptions.
- Actively combat tax evasion to boost revenues and improve governance.
- Continue progress in enhancing transparency and advancing governance reforms, particularly within the energy sector.
Social and humanitarian considerations:
- Address humanitarian relief required by the drought.
- Authorities have upscaled social spending to support the most vulnerable and continue to provide free primary education.

Discussions will continue virtually in the coming weeks to:
- Better assess the economic impact of the drought.
- Agree on policies to support the completion of the ECF Third Review.
Statement excerpt from Ms. Vera Martin:
- “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.”
- “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.”
- “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.”

IMF press release, May 9, 2024.