By Cecilia Chiluba/Zambia/Lusaka
Zambia has reportedly lost approximately US$200 million in revenue following the implementation of significant tax relief measures in the energy sector to combat rising fuel costs arising from the conflict in the Gulf region.
The measures include the suspension of Value Added Tax (VAT) and excise duty on petrol and diesel imports for three months, effective 1st April 2026, to ease the burden on consumers.
Minister of Finance and National Planning, Dr. Situmbeko Musokotwane called for broader and more strategic use of fiscal policy across Africa, arguing that the continent must move beyond managing recurring shocks and begin using public policy more deliberately to raise productivity, strengthen energy security, and transform the structure of its economies.
Dr. Musokotwane made the remarks when he shared Zambia’s experiences in addressing the emerging war-induced global economic crisis, at the ongoing Spring Meetings of the IMF and the World Bank in Washington D.C., USA.
In his remarks to delegates at the over-subscribed IMF Africa Fiscal Forum, the identified the most immediate risk facing many African economies over the next 12 months as a possible energy crisis arising from the conflict in the Gulf region.
Dr. Musokotwane noted that such a development could intensify inflationary pressures, raise production costs, and place additional strain on already constrained fiscal positions.
While indicating that support from institutions such as the IMF would be welcome where necessary, he stressed that African governments must also continue undertaking domestic reforms that improve resilience and strengthen the quality of public spending.
“One of the clearest responsibilities of fiscal policy is to shift resources away from inefficient subsidies and toward areas with greater long-term social and economic value,” he said.
The Minister cited Zambia’s re-orientation from generalized fuel subsidies towards free education and other social sectors as an example of a more purposeful use of public resources.
Dr. Musokotwane also pointed to the use of digital systems in agricultural support programs as a practical reform that has helped improve targeting, reduce waste, and remove ineligible beneficiaries who had previously taken advantage of public support intended for genuine farmers.
The Minister challenged the forum to confront what he described as Africa’s deeper development problem: the continent’s limited productive base and its declining share of global trade, despite its vast endowment of natural resources, young population, and economic potential.
He questioned why Africa has fallen behind in sectors and commodities that once had strong roots on the continent, and why many of the goods consumed globally are now produced elsewhere by countries that made earlier and more disciplined investments in productivity, skills, manufacturing, and value addition.
“This is where fiscal policy must become more ambitious. Fiscal policy should not be seen only as a tool for financing budgets or cushioning crises. It must also become an instrument for structural transformation — one that supports productive sectors, upgrades human capital, expands energy capacity, encourages industrialization, and creates the conditions for African economies to compete more effectively in regional and global markets,” Dr. Musokotwane argued.
“Economies that produce more, diversify more, and trade more competitively are better positioned to absorb shocks without slipping into repeated crisis.”
