Despite favorable growth prospects, Zambia continues to face budgetary pressures that complicate its economic stabilization efforts. To support the reforms underway, the country has reached a preliminary agreement with the International Monetary Fund (IMF) on a $1.47 billion financing program over 36 months.
Zambia’s economy is expected to record real growth of 5.6% in 2026, according to the IMF’s latest projections, compared with the 5.8% forecast in January. This momentum is expected to be supported in particular by increased agricultural production, the development of mining activities, and rising exports.
Copper, the country’s main export commodity, is expected to continue playing a central role in this development. However, these favorable prospects are not enough to dispel concerns about the state of public finances.
On the fiscal front, Zambian authorities are facing tax revenues below expectations. This underperformance is mainly due to lower-than-expected value-added tax (VAT) receipts and a reduction in fuel taxes.
At the same time, spending by the Food Reserve Agency has exceeded the amounts initially allocated. This development has contributed to a deterioration in the primary fiscal balance compared with 2025, increasing pressure on public finances.
On the other hand, some monetary indicators show more favorable developments. Inflation fell to 6.1% in September 2026, within the Bank of Zambia’s target range. Gross international reserves, meanwhile, reached $6.1 billion.
To restore balance to public finances, the government plans to eliminate temporary fuel tax relief and reduce investments considered non-priority.
The authorities also aim to achieve a primary fiscal surplus equivalent to 3% of gross domestic product (GDP) by 2029. This objective is expected to rely on increased domestic revenue mobilization and the rationalization of tax exemptions.
These measures are intended to improve the country’s fiscal performance and strengthen its ability to meet its financial commitments, while preserving the conditions necessary for continued growth.
In this context, Zambia and the IMF have reached a preliminary agreement on a new 36-month economic program under the Extended Credit Facility (ECF), worth $1.47 billion.
The arrangement is intended to help cover budget and balance-of-payments financing needs, preserve public debt sustainability, and support more diversified economic growth, driven in particular by the private sector.
However, the agreement is not yet final. Its implementation remains subject to approval by the IMF Executive Board and compliance with the prior measures agreed upon with the Zambian authorities.
This new agreement follows the completion, in January 2026, of the previous IMF program, approved in August 2022 and worth approximately $1.7 billion.
That initial arrangement had supported the country’s economic stabilization efforts. Nevertheless, the budgetary pressures that emerged in 2026 show that several challenges remain, particularly regarding public revenue mobilization, expenditure control, and debt management.
For Zambia, the challenge now will be to consolidate its economic gains while reducing fiscal imbalances. The success of this strategy will depend on the effective implementation of reforms and the country’s ability to transform its mineral resources into a driver of more diversified and sustainable development.
