The International Monetary Fund (IMF) projects Zambia’s primary fiscal surplus to decline to 1.1% of GDP in 2026, down from 3.1% recorded in 2025, while GDP growth is forecast at 4.3% and inflation is projected to reach 8.5% by the end of 2026.
The announcement follows the conclusion of an IMF staff mission to Lusaka led by Edward Gemayel, which visited from April 30 to May 13, 2026 to assess economic developments and discuss a possible successor IMF-supported arrangement following the completion of the Extended Credit Facility program.
The IMF said Zambia had made substantial progress in macroeconomic stabilization, including the accumulation of international reserves to USD 6.4B, equivalent to 4.4 months of import cover, and a 3.1% of GDP primary fiscal surplus recorded in 2025.
Debt restructuring agreements now cover approximately 94% of the restructuring perimeter.
The Fund said fiscal performance is expected to weaken in 2026, with the primary surplus projected to fall to 1.1% of GDP, compared with 3.8% projected at the time of the sixth review of the previous program.
The deterioration is attributed to weaker tax revenues, suspension of fuel VAT and excise duties, pre-election spending pressures, a civil service wage adjustment, and agricultural subsidy overruns estimated at 1.3% of GDP.
The IMF also highlighted continued underperformance in domestic VAT collection linked to administrative and structural weaknesses at the revenue authority, alongside a growing VAT refund backlog affecting compliance.
Economic growth is projected at 4.3% in 2026, reflecting weaker mining output, normalization of agricultural production after the strong 2025 harvest, softer trade activity, energy constraints, and spillovers from geopolitical tensions.
The current account is expected to move into a surplus of 1.5% of GDP, while inflation is projected at 8.5% at end-2026, reflecting higher fuel prices and external pressures partially offsetting currency appreciation.
The IMF said risks to the outlook remain elevated due to global energy price volatility and geopolitical uncertainty.
The Fund said monetary policy calibration remains important following recent interest rate cuts by the Bank of Zambia, and emphasized the need for coordination between fiscal and monetary authorities to maintain macroeconomic stability.
On fuel policy, the IMF noted that the suspension of the TAZAMA open-access framework removed a mechanism that previously reduced fuel import premiums by about 50%, and recommended its restoration and the resumption of transparent fuel import auctions.
Edward Gemayel, IMF mission chief, said at the conclusion of the visit: “Zambia has made substantial progress in restoring macroeconomic stability under its recently completed Extended Credit Facility (ECF) arrangement. Tangible revenue gains are urgently needed to reduce the domestic interest burden and bring debt to a moderate risk of distress.”
IMF and Zambia
Zambia has recently completed its Extended Credit Facility (ECF) arrangement with the International Monetary Fund, focused on stabilizing public finances, restoring debt sustainability, and rebuilding external buffers following years of macroeconomic pressure.
The country is now in a transition phase, with discussions underway on a possible successor IMF-supported arrangement following the August 2026 elections.
