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The International Monetary Fund (IMF) has urged the government to accelerate structural reforms in the energy sector, governance, public procurement, and the business environment to unlock growth potential and support job creation.”
“Continuing the reform momentum is essential to build resilience, create fiscal space, and crowd in private investment,” said Vera Martin, IMF Mission Team Leader.
According to the IMF, the local economy has shown encouraging resilience despite economic shocks.
The IMF has indicated that growth is expected to strengthen in 2025, supported by an anticipated rebound in agriculture and a pickup in mining activity.
“However, a slow recovery in electricity generation and electricity shortages could undermine the rebound, underscoring the need for sustained reforms in the energy sector.”
Martin further indicated that the fiscal primary balance in 2024, estimated at 2.9 percent of GDP, outperformed expectations, marked by constrained financing and spending compression.
“Yet, spending pressures are emerging in 2025 due to rising debt service and social spending needs. Mobilizing domestic revenues, in the context of constrained financing conditions, remains critical to preserving fiscal and debt sustainability and safeguarding priority social and infrastructure spending.”
IMF further applauded that the government remained committed to improving public financial management and fiscal transparency, while enhancing tax administration.
“Reforms to reduce tax expenditures, to make the tax regime more progressive, and improve expenditure controls are essential to build additional fiscal resilience.”
The inflation is projected to gradually decline over the course of the year, reflecting expected easing in food and fuel prices.
“The Bank of Zambia should continue to maintain a data-driven and forward-looking monetary policy stance to bring inflation on a downward trend towards the inflation band while supporting macroeconomic stability,” said Martin.
She said, given extremely high levels of global policy uncertainty, the external environment remains challenging, with downside risks to the growth outlook arising from subdued global demand, elevated commodity price volatility, and declining official development support.
Meanwhile, the IMF has indicated that the recently concluded talks with government authorities on economic and financial policies could underpin the completion of the Fifth Review under the ECF arrangement.
