Zambia: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Zambia

IMF Staff Country Reports, August 2, 2019

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Canonical URL: Zambia: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Zambia

Publication date: August 2, 2019
Core finding: Development strategy targeted a rapid scale-up of public investment to address infrastructure needs; anticipated growth dividend has yet to materialize.
Consequence: Debt burden has risen sharply, resulting in currency weakness and rising local borrowing costs that have further pushed up the interest bill.
Needed approach: A large, frontloaded, and sustained fiscal effort is needed to bring debt down to safer levels.

Recent efforts to adjust the fiscal stance delivered some improvement in revenues, but deficits have continued to rise following faster-than-budgeted execution of foreign-financed capital spending.
Key fiscal actions recommended:
- Moratorium on contracting new external non-concessional borrowing.
- Steps to raise revenues.
- Halt the build-up of domestic expenditure arrears.
- Better prioritize public investment projects.

Public investment scaling aimed at infrastructure but growth dividend not yet realized.
Steady attention to the business environment is needed to support private investment going forward.

Subject: Arrears, Expenditure, External debt, Public debt, Public investment and public-private partnerships (PPP), Public investment spending
Keywords: Arrears, arrears to Belgium, balance of payments estimate, CR, debt vulnerability, deficit, East Africa, Global, infrastructure investment, ISCR, Public investment spending, Southern Africa, staff appraisal