By Cecilia Chiluba/Zambia/Lusaka
International Monetary Fund (IMF) has revised Zambia’s 2025 economic growth forecast downward to 4.5 percent, citing weaker performance in the mining sector, softer wholesale trade and continued energy constraints affecting economic activity.
An IMF staff team led by Edward Gemayel visited Zambia from February 26 to March 4, 2026 as part of the Fund’s regular engagement with the Zambian authorities and other stakeholders.
At the conclusion of the visit, Mr. Gemayel noted that although Zambia has made notable progress in stabilizing the economy, growth prospects have been revised downwards due to emerging domestic challenges.
He observed that the economic outlook remains positive, although downside risks have increased amid domestic challenges and heightened global uncertainty.
“Growth for 2025 has been revised downward to 4.5 percent, reflecting weaker-than-expected performance in the mining sector, softer wholesale trade, and continued energy-related constraints on non-mining activities,” Mr. Gemayel stated.
The IMF team lead also projected that growth will moderate to 5.5 percent in 2026 as agricultural output returns to normal levels following last year’s strong harvest.
“The moderation in growth projected for 2026, at 5.5 percent, reflects a normalization of agricultural output following last year’s bumper harvest,” he said.
Despite the downgrade, the IMF noted that Zambia has made substantial progress in restoring macroeconomic stability following the completion of the IMF-supported programme, with most of the country’s public external debt restructured.
Mr. Gemayel noted that international reserves have strengthened, economic growth has picked up and inflation has continued to decline. “These outcomes reflect sustained reform efforts and have helped reinforce Zambia’s credibility with creditors and market participants,” Mr. Gemayel said.
He, however cautioned that global developments could still pose risks to Zambia’s economy.
According to Mr. Gemayel, rising global oil prices and geopolitical tensions could exert renewed pressure on inflation and the exchange rate.
He noted that if these pressures persist, appropriate domestic price adjustments to higher international oil prices would help mitigate potential losses in fuel tax revenues, while emphasizing the need for Zambia to build fiscal buffers and maintain policy discipline.
The IMF mission also raised concern over emerging fiscal pressures linked to the government wage bill, agricultural support programmes and election-related spending. “In this context, the scale and financing of the Food Reserve Agency’s operations will require careful management to avoid the reemergence of quasi-fiscal risks.”
“Absent corrective measures, the 2026 primary surplus is projected to fall by about 1 percentage point of GDP relative to the 3.8 percent of GDP envisaged at the last review under the recently completed ECF-supported program,” Mr. Gemayel said.
He also noted that the Zambian Government reiterated its interest in a successor IMF arrangement, with the IMF emphasizing that the next phase of engagement should focus on further strengthening macroeconomic stability and advancing reforms to improve the business climate and support private sector-led growth.
“Initial technical discussions could begin as early as late April, with more engagement expected after the general elections once a new government is in place which would allow for greater clarity on policy priorities,” Mr. Gemayel remarked.
