IMF Executive Board Concludes 2025 Article IV Consultation and Completes Fifth Review Under the Extended Credit Facility with Zambia
IMF News, August 5, 2025
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- Published: August 5, 2025
Overview
- On July 25, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation and fifth review of Zambia’s 38-month Extended Credit Facility (ECF) Arrangement, approved on August 31, 2022, and financing assurances review for Zambia.
- Completion of this review allows for an immediate disbursement of SDR 139.88 million (about US$184 million), bringing Zambia’s total disbursement under the ECF-supported program to SDR 1132.74 million (about US$1.55 billion).
- The ECF Arrangement seeks to entrench macroeconomic stability, restore debt and fiscal sustainability, enhance public governance, and foster inclusive growth to improve the livelihood of the Zambian people.
- The authorities have consented to the publication of the Staff Report prepared for this consultation.
Program performance
- Performance status:
- All end-December 2024 quantitative targets met.
- Most end-March 2025 indicative targets met.
- Three end-March 2025 indicative targets missed: non-mining tax revenues, arrears clearance, and reserve accumulation.
- Structural benchmarks (SBs) for this review:
- Six out of fourteen SBs met.
- Four SBs completed with delays.
- Four SBs (on debt office procedures, along with financial sector and governance reforms) proposed to be reset to the next review.
- Prior actions and waivers:
- The recent adoption of an amended 2025 budget in line with program commitments satisfies the prior action set for this review.
- Executive Board granted a waiver for nonobservance of the continuous performance criterion on contracting non-concessional external debt in the fourth quarter of 2024.
Economic outlook and risks
- Growth:
- Real GDP growth estimated at 4 percent in 2024.
- Real GDP growth projected at 5.8 percent in 2025 and 6.4 percent in 2026, 6.5 percent in 2027.
- Inflation:
- Headline inflation expected to decline to 11 percent by end-2025.
- Annual average inflation figures: 15.0 percent (2024), 14.2 percent (2025), 9.2 percent (2026), 7.4 percent (2027).
- End-of-year inflation figures: 16.7 percent (2024), 11.1 percent (2025), 7.9 percent (2026), 7.0 percent (2027).
- Key drivers:
- Recovery supported by stronger mining and services performance and continued recovery in agricultural production following the historic drought.
- Electricity access prioritized to productive sectors.
- Risks:
- Outlook subject to significant downside risks stemming from global uncertainty.
- Medium-term prospects depend on scaling up mining investment, sustained fiscal discipline, and structural reforms to promote private sector activity, economic diversification, and more inclusive growth.
Debt position and restructuring
- Public debt assessment:
- Zambia’s public debt is assessed as sustainable, but the country remains at high risk of overall and external debt distress.
- Although at high risk because of near-term breaches of the DSA thresholds, it is expected to reach a moderate risk of external debt distress over the medium term.
- Restructuring progress:
- Authorities have reached agreements in principle with most external commercial creditors.
- Efforts ongoing to advance bilateral agreements with official bilateral creditors, in line with program parameters and comparability of treatment as defined by the Official Creditors Committee.
- Directors welcomed good progress on external commercial and official debt restructuring and encouraged prompt finalization of all restructuring agreements.
Executive Board Assessment — main policy advice and priorities
- Fiscal policy and revenue:
- Underscored importance of revenue-led fiscal consolidation to address fiscal and growth challenges.
- Welcomed new revenue measures and spending reprioritization in the revised 2025 budget.
- Called for intensified domestic revenue mobilization over the medium term to create space for priority social and capital spending while strengthening debt sustainability.
- Emphasized broadening the tax base and improving tax administration.
- Encouraged further strengthening of public financial management to improve efficiency, transparency, and credibility of fiscal operations.
- Emphasized the need for sustained budget discipline ahead of the 2026 elections.
- Monetary and financial policy:
- Recommended the Bank of Zambia (BOZ) maintain an appropriately tight monetary-policy stance to combat inflation.
- Supported BOZ’s data-driven approach and urged strengthening monetary policy transmission to anchor inflation expectations.
- Supported efforts to strengthen liquidity operations, deepen financial markets, and underscored importance of reserve accumulation and sustained exchange rate flexibility to absorb external shocks.
- Encouraged further reforms to enhance financial stability and inclusion.
- Structural and governance reforms:
- Stressed structural reforms to stimulate private sector activity and economic diversification: improve business environment, raise labor productivity, enable firm expansion, reform agricultural support mechanisms, address informality, infrastructure gaps, and limited access to finance.
- Underscored importance of strengthening governance, promptly adopting the new Anti-Corruption Act, and strengthening independence of the Anti-Corruption Commission.
- Reiterated calls for enhanced transparency in the energy sector and resource management.
Key statistics and selected economic indicators
- Population (millions, 2024): 21.1
- Per capita GDP ($, 2024): 1,246
- Quota (SDR millions, % total): 978.2
- Poverty rate (2022): 64.3
- Main products and exports: Copper
- Key export markets: China
- Output (Real GDP growth %):
- 2021: 6.2
- 2022: 5.2
- 2023: 5.4
- 2024 Est.: 4.0
- 2025 Proj.: 5.8
- 2026 Proj.: 6.4
- 2027 Proj.: 6.5
- Prices (Inflation annual average %):
- 2021: 22.0
- 2022: 11.0
- 2023: 10.9
- 2024: 15.0
- 2025: 14.2
- 2026: 9.2
- 2027: 7.4
- Central government finances (% GDP):
- Revenue: 2021: 22.4; 2022: 20.4; 2023: 21.9; 2024: 22.2; 2025: 22.8; 2026: 23.0; 2027: 23.3
- Expenditure: 2021: 30.5; 2022: 28.2; 2023: 27.4; 2024: 25.5; 2025: 28.0; 2026: 26.7; 2027: 24.9
- Fiscal balance (cash basis): 2021: -8.1; 2022: -7.8; 2023: -5.5; 2024: -3.3; 2025: -5.3; 2026: -3.7; 2027: -1.6
- Fiscal balance (commitment basis): 2021: -13.9; 2022: -5.4; 2023: -4.5; 2024: -1.9; 2025: -2.3; 2026: -2.1; 2027: -0.3
- Public debt (% GDP): 2021: 112.1; 2022: 110.9; 2023: 133.4; 2024: 123.9; 2025: 91.9; 2026: 79.0; 2027: 69.4
- Money and Credit:
- Broad money (% change): 2021: 3.7; 2022: 24.5; 2023: 24.6; 2024: 19.1; 2025: 14.7; 2026: 13.6
- Credit to private sector (% change): 2021: 34.2; 2022: 41.3; 2023: 20.5; 2024: 52.1; 2025: 29.7; 2026: 12.7
- 3-month Treasury bill interest rate (%): 2021: 12.8; 2022: 9.6; 2023: 9.8; 2024: 10.1
- Balance of payments:
- Current account (% GDP): 2021: 11.9; 2022: -3.0; 2023: -2.6; 2024: 1.3; 2025: 2.7
- FDI (% GDP): 2021: 3.1; 2022: 0.7; 2023: 1.8; 2024: 3.8; 2025: 4.5
- Reserves (in months of imports): 2021: 3.3; 2022: 3.4; 2023: 4.2; 2024: 4.4; 2025: 4.7
- Exchange rate:
- REER (% change): 2021: 5.0; 2022: 30.3; 2023: -7.1; 2024: -13.3
IMF Press Release No. 25/276, August 5, 2025.