According to a budget plan presented by Zambia's Ministry of Finance on Sunday, the Zambian economy is projected to grow by just 2.7% in 2023, down from 4.7% in 2022, as contractions in the mining and energy sectors restrain development.
After becoming the first country in Africa to default on its sovereign debt in 2020, Zambia and the International Monetary Fund (IMF) have now finalized a long-delayed debt restructuring plan. According to research from the IMF, this will save the southern African nation $7.65 billion by 2026.
According to the budget plan, economic growth in Zambia is projected to be 4.8% in 2024, 4.3% in 2025, and 5.0% in 2026, depending on how macroeconomic conditions are improved and reforms are carried out.
As Zambia works to restore fiscal sustainability, the country is experiencing a rise in confidence, according to Secretary to the Treasury Felix Nkulukusa.
As of the end of 2022, the nation owed $20.9 billion abroad. According to budget data, debt service costs will amount to $6.24 billion, or 16.5% of GDP, over the medium term. In 2020, Zambia defaulted on its $18.6 billion foreign debt after discussions stalled due to disagreements between Chinese and Western creditors. The loan arrangement had allegedly been delayed by China, according to the US.
Officials announced in June that Zambia's lenders, including its largest creditor, China, had agreed to restructure the country's public debt, providing financial relief to the country, which was the first African government to default since the Covid epidemic.
The initial evaluation of Zambia's $1.3 billion Extended Fund Facility (EFF) program has been completed by the IMF and Zambia.
Late last week, the IMF's executive board authorized an immediate transfer of $189 million to Zambia. By the end of the IMF's second assessment later this year, the country also hopes to sign a memorandum of understanding to restructure further debt with private creditors.
With a population of close to 20 million, Zambia is the largest copper producer in Africa. Copper production is predicted to fall to 682,431 tonnes in 2023 from 763,550 tonnes in 2022, according to the budget paper.