Zambia Aims for Economic Recovery Following Severe Drought, Reports Reuters

By Chris Mfula

LUSAKA – Zambia is aiming for a significant rebound in economic growth and a reduction of its budget deficit next year, recovering from one of the worst droughts in recent history, according to its finance minister.

The country is targeting a growth rate of 6.6% for 2025, a notable increase compared to the forecasted 2.3% growth for 2024, as mentioned by Finance Minister Situmbeko Musokotwane during a budget speech.

The drought induced by El Niño has devastated crops across southern Africa, leading to food shortages and negatively impacting the region’s economic outlook this year.

Musokotwane indicated that the anticipated growth in the coming year relies heavily on improved performance in the mining and agriculture sectors.

Zambia aims to achieve a budget deficit of 3.1% of its gross domestic product (GDP) in 2025, a reduction from the projected 6.4% for 2024. Approximately 80% of next year’s spending will be funded through domestic revenues, with 4% sourced from grants and 16% from borrowing.

The finance minister also noted that Zambia is still in negotiations to restructure terms with some commercial creditors, having recently completed a restructuring of its Eurobonds.

He mentioned that Zambia has reached provisional restructuring agreements with major Chinese banks, which align with the country’s International Monetary Fund program. These agreements adhere to the “Comparability of Treatment principle,” which aims to ensure that wealthy creditor nations do not offer disproportionately favorable concessions compared to other creditors.

The prolonged debt restructuring process in Zambia has suppressed investment levels and affected local financial markets.