IMF notes Zambia’s economic recovery strides

The International Monetary Fund (IMF) says the Zambian government has made significant strides in the country’s economic growth agenda through a number of policy reforms.

IMF Resident Representative for Zambia, Eric Lautier, says over the past three years, the government has achieved the restoration of fiscal and debt sustainability.

Speaking during the ZNBC Sunday Interview night, Mr Lautier referred to the deficit before 2021, which was averaged in double digit as some of the reasons for borrowing heavily during that period.

Mr Lautier explained that with a 12 percent of overall fiscal deficit every year from 2018 to 2021, the country was always accumulating debt piles, a situation he said was unsustainable.

He however commended the government that it has, since 2021, introduced progressive reforms resulting in disciplined and better targeted spending, while social spending has remained protected.

He added that there is remarkable reallocation from ineffective spending to more targeted and effective spending, citing the health and education sectors where the country has witnessed massive recruitment that is helping to build the human capital.

In terms of debt restructuring, Mr Lautier commended Zambia for attaining about 94 percent debt under restructuring parameters that has been restructured.

“Since the programme began, the overall fiscal balance improved sharply, we had a 5.4 deficit in 2022, 4.5 percent in 2023 which was further narrowed to below two percent in 2024,” he said.

He further highlighted the positive reforms in the agriculture sector that are ensuring high productivity as farmers are getting access to finance to invest in their farms.

Mr Lautier cited the e-voucher as a game changer in the distribution of inputs and also the participation of the private sector in agribusiness.

And Mr Lautier said social spending should be coupled with reforms that focus on sectors that create jobs through tackling the structural barriers that keep small firms in the informal sector and give them incentives to formalise.

He however bemoaned the low rate of access to financing for SMEs, noting the need to improve the financial market infrastructure by modernising the credit information system.

He added that there is need to make formalisation of small businesses attractive by providing favourable incentives for SMEs such as simplifying tax policies, and licensing, which are adequate for development to SMEs.

And a Lusaka –based economist, Kelvin Chisanga, has supported the views of the IMF, stating that Zambia’s economy is on the recovery track due to pursuit in macroeconomic environment, with 2025 growth expected to be between 5.8 and 6.2 percent.

Mr Chisanga added that the budget reform is showing high credibility which is essential to ensuring value for money in public investment.

“IMF iodised debts for Zambia. At the point when we were not credible to sit with creditors, IMF fostered that balance,” he said.

He indicated that social inclusion and transparency must guide Zambia’s next phase of reforms.