Press Release No. 26/024

Washington, DC:  The Executive Board of the International Monetary Fund (IMF) completed today the sixth and final review of Zambia’s 38-month Extended Credit Facility (ECF) Arrangement, approved on August 31, 2022. The completion of this review allows for an immediate disbursement of SDR 138.9 million (about US$190 million), bringing Zambia’s total disbursement under the ECF-supported program to SDR 1,271.66 million (about US$1.7 billion).

Program performance has been broadly satisfactory, albeit with some delays on structural conditionality. All end-June 2025 quantitative performance criteria (QPC) and indicative targets (ITs) were met, except for the QPC on net international reserves and the IT on spending arrears clearance. Eight out of nineteen structural benchmarks (SBs) were met, and six additional SBs were completed with delays. The submission to Parliament of the revised Banking and Financial Services Act (BFSA), broadly aligned with international standards, satisfied the prior action set for this review. The Executive Board also granted a waiver for the nonobservance of the QPC on net international reserves at end-June 2025.

Zambia’s economic outlook remains positive. Real GDP growth is estimated at 5.2 percent in 2025, underpinned by strong mining activities and record-high maize production. Real GDP growth in 2026 is projected at 5.8 percent on the back of continued recovery in electricity generation and strong performance in mining and services. Inflation is projected to converge gradually toward the 6-8 percent target band by 2027. Notwithstanding heightened global uncertainty, the medium-term outlook remains favorable and hinges on scaling up mining investment, robust agriculture production, improved electricity generation, and sustained fiscal discipline. Continued efforts are needed to promote private sector participation, economic diversification, and more inclusive growth.

Zambia’s public debt is assessed as sustainable but remains at high risk of overall and external debt distress. External debt restructuring continues to advance as five bilateral agreements with official creditors have been signed, and progress with commercial creditors is advancing. Provided that the authorities maintain the projected fiscal consolidation path, Zambia is expected to reach a moderate risk of external debt distress over the medium term.

Following the Executive Board discussion on Zambia, Mr. Nigel Clarke, Deputy Managing Director and Acting Chair, issued the following statement:

“Despite external and domestic shocks, Zambia has significantly reduced macroeconomic imbalances, made considerable progress on debt restructuring, and undertaken sustained fiscal consolidation while safeguarding social spending. The performance under the program has been broadly satisfactory and the authorities should remain focused on maintaining prudent macroeconomic policies and advancing reforms to foster inclusive and private-sector-led growth.  Continued engagement with the Fund and development partners would support these policy endeavors.

“Fiscal performance in 2025 remained strong. Fiscal consolidation driven by revenue mobilization remains essential to consolidate macroeconomic gains, while protecting social spending, and create fiscal space to meet development needs. The authorities’ focus on strengthening revenue mobilization and enhancing public financial management is appropriate. Prudent borrowing and further progress on debt restructuring are necessary to ensure debt sustainability.

“Careful monetary policy calibration to gradually bring inflation toward the target band will be key to anchoring inflation expectations and preserving price stability. Rebuilding reserves buffers and sustaining exchange rate flexibility are important to enhance resilience to external shocks. The review of the Banking and Financial Services Act and the adoption of the deposit insurance scheme are welcome steps to strengthen financial stability.

“Governance and structural reforms remain vital for promoting private sector activity and supporting diversification and inclusive growth. The revised Agricultural Acts will enhance predictability and support private sector investment. Continued efforts to strengthen governance and enhance transparency in the energy sector will improve the business climate and support sustainable growth. Measures to enhance climate resilience are important to help to safeguard development gains.”

 

Zambia: Selected Economic Indicators

Population (millions, 2024): 21.3   Per capita GDP ($, 2024):   1,187 Quota (SDR millions, % total): 978.2 %) Poverty rate (2022):   64.3 Main products and exports: Copper           Key export markets: China               2021 2022 2023 2024 2025 2026 2027           Est. Proj. Output               Real GDP growth (%) 6.2 5.2 5.4 3.8 5.2 5.8 6.0                 Prices               Inflation annual average (%) 22.0 11.0 10.9 15.0 14.0 9.3 7.5 Inflation end-of-year (%) 16.4 9.9 13.1 16.7 11.0 8.2 7.0                 Central government finances               Revenue (% GDP) 22.4 20.4 21.9 23.1 23.3 24.3 23.5 Expenditure (% GDP) 30.5 28.2 27.4 26.5 27.9 27.0 25.5 Fiscal balance (cash basis, % GDP) -8.1 -7.8 -5.5 -3.5 -4.6 -2.8 -2.0 Fiscal balance (commitment basis, % GDP) -13.9 -5.4 -4.5 -2.0 -1.0 -1.8 0.0 Public debt (% GDP) 112.1 110.9 133.4 101.8 87.6 78.3 68.5                 Money and Credit               Broad money (% change) 3.7 24.5 24.6 23.0 10.0 13.6 12.8 Credit to private sector (% change) -7.8 34.2 41.3 20.5 30.4 24.1 15.3 3-month Treasury bill interest rate (%) 12.8 9.6 9.8 10.1 … … …                   Balance of payments               Current account (% GDP) 11.9 3.7 -3.0 -1.9 -2.1 1.7 2.6 FDI (% GDP) 3.1 0.7 1.8 5.3 4.5 4.6 4.8 Reserves (in months of imports) 3.3 3.4 3.3 3.7 4.0 3.9 4.2                 Exchange rate               REER (% change) 5.0 30.3 -7.1 -13.3 … … … Sources: Zambian authorities; and IMF Staff estimates and projections.