An IMF team led by Edward Gemayel held talks between April 30 and May 13, 2026, focusing on a successor programme after the completion of the Extended Credit Facility.
IMF assessment indicates that Zambia has made substantial progress in restoring macroeconomic balance. International reserves have risen to $6.4 billion, covering 4.4 months of imports, while inflation declined to 6.8% in April 2026, moving back into the Bank of Zambia’s target range.
Fiscal consolidation has also improved. The primary fiscal balance reached 3.1% of gross domestic product (GDP) in 2025, reflecting tighter spending control and stronger programme implementation. Debt restructuring agreements now cover 94% of eligible debt, easing external pressure.
Despite progress, the near-term outlook has weakened. Economic growth is now projected at 4.3% for 2026, reflecting slower mining output, normalisation in agriculture after a strong harvest, energy constraints, and external shocks linked to the Middle East conflict.
Inflation is expected to rise again to 8.5% by the end of 2026, driven by higher fuel prices, partly offset by a stronger currency and moderating food costs. The current account is expected to shift into a 1.5% surplus of GDP.
Public finances are under renewed strain. The primary surplus is projected to fall to 1.1% of GDP, down from earlier expectations, due to weaker tax collection and increased spending linked to elections, civil service wages, and agricultural subsidies.
Additional risks stem from quasi-fiscal pressures, including liabilities linked to food reserves. Revenue collection challenges, particularly around value-added tax, continue to limit fiscal space and weaken compliance.
The IMF said the next phase of reform must balance stability with growth. Key priorities include strengthening domestic revenue, improving public financial management, and supporting private sector development to diversify the economy beyond copper.
Energy supply constraints, agriculture productivity, tourism, and manufacturing were identified as critical areas for job creation and value addition.
The IMF stressed that maintaining close coordination between fiscal and monetary policy will be essential to contain inflation and sustain confidence. External reserves should be preserved near current levels to strengthen resilience.
The planned successor programme is expected to focus on consolidating recent gains while shifting toward more inclusive growth, with climate resilience and drought response also identified as priorities in a vulnerable economic environment.
–IMF/ChannelAfrica–
