Zambia’s economy is expected to grow by 5.8 percent in 2026, driven by a recovery in electricity production and strong performance in the mining and services sectors, the International Monetary Fund said on Tuesday.
The forecast marks an acceleration from an estimated 5.2 percent growth rate in 2025 and was released following the IMF’s completion of the sixth and final review of Zambia’s programme under the Extended Credit Facility (ECF).
The Fund said improved power generation after recent supply disruptions, alongside higher mining output and expanding services activity, should underpin growth. Inflation is also expected to continue easing and gradually converge toward the central bank’s target range of 6 percent to 8 percent by 2027.
“Despite heightened global uncertainty, the medium-term outlook remains favourable,” the IMF said in a statement, noting that sustained fiscal discipline, increased mining investment, improved electricity generation and robust agricultural production would be critical to maintaining momentum.
However, the Fund urged the authorities to step up reforms aimed at boosting private-sector participation, accelerating economic diversification and ensuring that growth is more inclusive.
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Zambia remains heavily dependent on copper mining, which accounts for the bulk of export earnings and government revenue. While higher global demand and expanded production capacity have supported growth, the IMF warned that reliance on the sector leaves the economy vulnerable to external shocks.
Debt burden remains high
The IMF said Zambia’s public debt remains sustainable but subject to a high risk of overall and external debt distress, as the country continues negotiations with creditors under its debt restructuring process.
According to World Bank estimates cited in the IMF review, Zambia’s public debt-to-GDP ratio is expected to fall to 90.7 percent in 2025, down sharply from 133 percent in 2023, reflecting fiscal consolidation efforts and progress in restructuring.
Still, the Fund cautioned that risks remain elevated, including climate-related shocks, recurrent hydroelectric power shortages and delays in completing debt treatment agreements with all creditors.
Zambia, Africa’s second-largest copper producer, was hit by severe electricity shortages in recent years due to droughts that reduced hydropower output. Power constraints weighed on mining and industrial activity, prompting authorities to accelerate investment in alternative energy sources.
The IMF said addressing structural bottlenecks in the energy sector would be essential to sustaining economic recovery.
Poverty reduction and reform challenges
Separately, the World Bank said Zambia’s poverty rate is projected to decline by about one percentage point per year through 2027, supported by steady growth and improving labour market conditions.
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The lender added that deeper structural transformation in subsistence agriculture and stronger job creation in urban areas could accelerate poverty reduction over the medium term.
Despite progress, income inequality remains high, and the IMF said more targeted social spending and labour market reforms would be needed to ensure that economic gains are widely shared.
$190 million disbursement approved
The IMF’s Executive Board approved a disbursement of $190 million following the completion of the 38-month ECF programme review, bringing total IMF financing for Zambia to $1.7 billion since August 2022.
The Fund said programme performance had been “broadly satisfactory,” despite delays in implementing some structural benchmarks.
“All quantitative performance criteria and indicative targets set for end-June 2025 were met, except for the quantitative performance criterion on net international reserves and the indicative target on the clearance of payment arrears,” the IMF said.
The latest disbursement is intended to support Zambia’s efforts to restore macroeconomic stability, strengthen economic resilience and lay the groundwork for sustained and inclusive growth.
Zambian authorities have said they remain committed to reforms agreed with the IMF, including fiscal consolidation, debt sustainability and measures to strengthen governance and transparency.
