Electricity Shortage Poses Threat to Zambia Economic Recovery
Zambia’s recovery is gaining pace, the International Monetary Fund (IMF) said following its fifth review with the authority, projecting that growth will strengthen in 2025.
The multilateral lender has been providing economic support to Zambian authorities following the country’s debt default and subsequent programmes to unlock access to external markets.
While the country’s economic condition has started to improve, the recent electricity shortage has added another layer of pressures that could affect Zambia’s economic growth.
The IMF said sustaining progress in a volatile environment requires stronger buffers and accelerated structural reform implementation.
IMF plan to continue to engage the authority to reach a staff-level agreement, address new spending needs and allow Zambia to respond to emerging challenges while restoring debt sustainability.
IMF mission team led by Ms. Vera Martin said, “The Zambian authorities and IMF staff have advanced the technical work and policy discussions as part of the Fifth Review under the Extended Credit Facility.
“Zambia’s economy has shown encouraging resilience despite economic shocks. Growth is expected to strengthen in 2025, supported by an anticipated rebound in agriculture and a pickup in mining activity.
However, a slow recovery in electricity generation and electricity shortages could undermine the rebound, underscoring the need for sustained reforms in the energy sector.
“The fiscal primary balance in 2024, estimated at 2.9 percent of GDP, outperformed expectations, marked by constrained financing and spending compression.
“Yet, spending pressures are emerging in 2025 due to rising debt service and social spending needs. Mobilizing domestic revenues, in the context of constrained financing conditions, remains critical to preserving fiscal and debt sustainability and safeguarding priority social and infrastructure spending.
“The authorities remain committed to improving public financial management and fiscal transparency while enhancing tax administration. Reforms to reduce tax expenditures, to make the tax regime more progressive, and to improve expenditure controls are essential to build additional fiscal resilience.
“Inflation is projected to gradually decline over the course of the year, reflecting expected easing in food and fuel prices. The Bank of Zambia should continue to maintain a data-driven and forward-looking monetary policy stance to bring inflation on a downward trend towards the inflation band while supporting macroeconomic stability. #Electricity Shortage Poses Threat to Zambia Economic Recovery#
