The International Monetary Fund (IMF) said Zambia has made significant progress in restoring macroeconomic stability following the completion of its IMF-supported programme, but warned that fiscal pressures and global uncertainty pose risks to the country’s economic outlook.
An IMF staff team led by Edward Gemayel visited Lusaka from February 26 to March 4 for discussions with the Zambian authorities as part of the Fund’s regular economic engagement with the country.
In a statement issued at the end of the visit, the IMF said Zambia had achieved important gains in stabilising its economy, including the restructuring of public external debt, stronger international reserves and declining inflation.
“These outcomes reflect sustained reform efforts and have helped reinforce Zambia’s credibility with creditors and market participants,” the Fund said.
The IMF added that inflation had recently fallen within the target range set by the Bank of Zambia, reflecting improved macroeconomic management.
Economic growth has also begun to recover, although the Fund said new challenges were emerging.
The IMF revised Zambia’s economic growth forecast for 2025 downward to 4.5 percent, citing weaker-than-expected performance in the mining sector, softer wholesale trade activity and continued energy shortages affecting non-mining industries.
Growth in 2026 is projected at 5.5 percent, reflecting a normalisation in agricultural production after a strong harvest last year.
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However, the Fund cautioned that rising global oil prices and geopolitical tensions could create renewed pressure on inflation and the exchange rate.
If international fuel prices remain elevated, Zambia may need to adjust domestic fuel prices to avoid losses in fuel tax revenues, the IMF said.
“Building buffers and preserving policy discipline will be essential,” the Fund added.
The IMF mission also highlighted emerging fiscal pressures that could threaten Zambia’s economic stabilisation efforts.
While the government’s 2026 budget framework aims to deliver a primary surplus of 3.8 percent of gross domestic product, IMF staff warned that spending pressures were already becoming visible.
These include higher government wage costs, increased support to the agricultural sector and election-related spending.
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The IMF said the operations of the Food Reserve Agency would require careful management to avoid the re-emergence of quasi-fiscal risks.
Without corrective measures, the Fund estimates that Zambia’s primary surplus in 2026 could fall by about one percentage point of GDP compared with earlier projections under the country’s recently completed IMF programme.
To address these risks, IMF staff emphasised the importance of integrating all spending pressures transparently into the government’s fiscal framework and adopting credible contingency measures.
The Fund also urged Zambia to continue structural reforms aimed at strengthening tax collection and improving customs administration.
Such reforms would help broaden the tax base and support what the IMF described as a more progressive and less complex tax system.
Zambian authorities also expressed interest in negotiating a successor programme with the IMF, which could help maintain policy discipline and support further economic reforms.
Initial technical discussions could begin as early as late April, the IMF said.
However, the Fund indicated that more substantive negotiations would likely take place after the country’s general elections later this year, when a new government is expected to clarify its policy priorities.
During the visit, the IMF delegation met with several senior officials, including President Hakainde Hichilema, Finance Minister Situmbeko Musokotwane and Denny Kalyalya, governor of the Bank of Zambia.
The Fund also held discussions with civil society organisations and development partners.
The IMF said it remains committed to supporting Zambia’s reform efforts and maintaining macroeconomic stability as the country navigates economic and political challenges in the coming months.
