LIVE: Parliament grills Barker-Vormawor over bribery allegation
IMF revises Zambia's economic growth in 2024 to 1.2%
IMF revises Zambia's economic growth in 2024 to 1.2%
By: Nii Ammui Fio | 2 mins read
The International Monetary Fund (IMF) has revised its economic growth forecast for Zambia in 2024 to 1.2%, down from the previously projected 2.3%.
This revision follows an IMF mission to Zambia from October 2 to October 15, 2024, led by Ms Mercedes Vera Martin, which held discussions with Zambian authorities on economic and financial policies aimed at securing approval for the Fourth Review under the Extended Credit Facility (ECF) arrangement.
The mission team engaged with several key government figures, including President Hakainde Hichilema, Finance Minister Situmbeko Musokotwane, and Central Bank Governor Denny Kalyala, alongside representatives of the private sector and development partners.
In a statement issued at the end of the mission, Ms Vera Martin highlighted the reasons behind the revised growth projection. "The Zambian economy has been severely impacted by the prolonged power outages due to load shedding, which has notably hindered growth in the non-mining sector. Growth in 2024 is projected at 1.2 per cent, from 2.3 per cent previously," she noted.
The IMF team also addressed the inflationary pressures that Zambia is currently facing. "Inflation is expected to continue increasing due to past kwacha depreciation, increasing food and fuel prices, and hikes in administrative prices," said Ms Vera Martin.
However, she added that "subdued import demand has helped reduce volatility in the kwacha and support reserve accumulation."
Despite these economic challenges, Zambia has made progress in fiscal performance, attributed to lower domestic financing and proactive spending reprioritization.
"To support the most vulnerable, the government has scaled up social cash transfers, implemented a cash-for-work program, and expanded free school lunch programs," she remarked.
The IMF emphasized the importance of responsive policymaking to maintain macroeconomic stability. "Against heightened uncertainty, responsive policymaking will be paramount to sustain macroeconomic stability while building resilience to shocks," Ms. Vera Martin stressed. She called for the prioritization of progressive revenue measures, including improved tax administration and streamlined tax exemptions, to strengthen fiscal buffers and ensure debt sustainability.
In addition to fiscal policies, the IMF mission underscored the need for reforms in energy and governance, which are critical to driving private sector-led growth and job creation in Zambia. The mission also urged the Zambian authorities to maintain agile monetary policies to curb inflation while supporting economic recovery in 2025.
The discussions with Zambia's authorities will continue in the weeks ahead, particularly during the IMF/World Bank Group Annual Meetings in Washington, D.C., scheduled for next week.
"The IMF remains a committed partner to Zambia, working closely with the authorities to develop strategies that effectively tackle the country's current economic challenges," concluded Ms. Vera Martin.
This mission and subsequent review will determine Zambia's progress under the ECF-supported program, which is crucial for addressing the country's economic hurdles.
