IMF cuts Zambia’s 2025 growth forecast to 4.5% amid mining, energy challenges

The International Monetary Fund (IMF) has downgraded Zambia’s growth prospects to 4.5 percent, citing domestic challenges and heightened global economic uncertainty. 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 on Thursday evening, Gemayel said economic growth for 2025 had been revised downward to 4.5 percent, reflecting weaker-than-expected performance in the mining sector, softer wholesale trade, and continued energy-related constraints affecting non-mining activities.

He added that growth for 2026 was projected at 5.5 percent, reflecting a normalization of agricultural output following last year’s bumper harvest. Gemayel further warned that rising global oil prices and elevated geopolitical tensions could place renewed pressure on inflation and the exchange rate. Should these conditions persist, he said appropriate domestic price adjustments to higher international oil prices would help mitigate potential losses in fuel tax revenues.

“Against this backdrop, building buffers and preserving policy discipline will be essential,” he said. The IMF team held discussions with Zambian authorities on recent macroeconomic developments, the economic outlook and policy priorities for the period ahead. Gemayel noted that Zambia had made substantial progress in restoring macroeconomic stability under the recently completed IMF-supported programme.

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“Public external debt has been largely restructured, international reserves have strengthened, growth has picked up, and inflation has continued to decline—recently reaching the Bank of Zambia’s target band,” Gemayel said. “These outcomes reflect sustained reform efforts and have helped reinforce Zambia’s credibility with creditors and market participants,” he added. The mission also discussed emerging fiscal pressures.

While the 2026 budget framework targets a strong primary surplus, Gemayel said early signs of slippage had begun to emerge due to spending pressures related to the wage bill, government support to the agricultural sector and election-related expenditures. He noted that the scale and financing of operations by the Food Reserve Agency (FRA) would require careful management to avoid the re-emergence of quasi-fiscal risks.

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