Zambia’s Economic Growth Plans

By Chris Mfula

LUSAKA (Reuters) – Zambia is aiming for a sharp rebound in economic growth and a halving of its budget deficit next year as it recovers from the worst drought in living memory, according to its finance minister.

The copper producer is targeting growth of 6.6% in 2025, compared to a forecast for 2.3% growth in 2024, Finance Minister Situmbeko Musokotwane stated in a budget speech.

The El Nino-induced drought has wiped out crops across southern Africa, causing food shortages and denting the region’s economic prospects this year.

Musokotwane mentioned that next year’s rebound is based on better performance of mining and agriculture.

Zambia is aiming for a budget deficit of 3.1% of GDP in 2025, down from a projected 6.4% in 2024. Nearly 80% of next year’s spending will be financed by domestic revenues, 4% by grants, and 16% through borrowing.

The minister also noted that Zambia is still negotiating restructuring terms with certain commercial creditors after completing a Eurobond restructuring exercise. Recently, provisional restructuring agreements have been reached with the Industrial and Commercial Bank of China and China Development Bank.

These agreements align with Zambia’s IMF programme and the “Comparability of Treatment principle,” ensuring that the Paris Club of wealthy creditor nations does not provide excessive concessions compared to other creditors.

Zambia’s extended debt restructuring process has deterred investment and impacted local financial markets.