Zambia’s economy is expected to grow by just 2.7% in 2023, down from 4.7% in 2022, according to a budget plan released by the country’s ministry of finance Dr Situmbeko Musokotwane on Sunday. This is because the mining and energy sectors are expected to have contractions.
Zambia and the International Monetary Fund (IMF) have now agreed an extendable debt restructuring plan after Zambia became the first nation in Africa to default on its sovereign debt in 2020. The IMF estimates that by 2026, this will save the southern African country $7.65 billion (Ksh1.082 trillion).
Business Insider Africa reported that depending on how macroeconomic conditions are improved and reforms are implemented, Zambia’s economic growth is anticipated to be 4.8% in 2024, 4.3% in 2025, and 5.0% in 2026.
According to Felix Nkulukusa, secretary of the Treasury, Zambia is witnessing increased confidence as it attempts to regain fiscal sustainability.
The country had foreign debt of $20.9 billion (Ksh2.95 trillion) as of the end of 2022. Budget information indicates that debt service expenditures over the medium term will total $6.24 billion (Ksh883.27 billion), or 16.5% of GDP.
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2020 saw Zambia’s $18.6 billion (Ksh2.63 trillion) foreign debt default as negotiations came to a standstill over differences between Chinese and Western creditors. According to the US, China had allegedly delayed the financing agreement.
Zambia was the first African nation to default since the COVID outbreak when officials announced in June that its creditors, notably its biggest creditor, China, had agreed to restructure the nation’s public debt. This provided Zambia some financial relief.
The IMF and Zambia have finished their initial assessment of Zambia’s $1.3 billion (Ksh184 billion) Extended Fund Facility (EFF) program.
The IMF’s executive board approved an immediate release of $189 million (Ksh26 billion) to Zambia late last week. The nation also intends to execute a memorandum of understanding to restructure further debt with private creditors by the end of the IMF’s second review later this year.
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Zambia, which has a population of about 20 million, is the continent’s top copper producer. According to the budget report, copper production will decrease from 763,550 tonnes in 2022 to 682,431 tonnes in 2023.
