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The Civil Society for Poverty Reduction (CSPR) has warned that failure to effectively address Zambia’s economic challenges could lead to fiscal instability, undermining the macroeconomic targets outlined in the recently launched Medium-Term Budget Plan (MTBP).
The MTBP aims to reduce Zambia’s fiscal deficit from 3.1 percent of Gross Domestic Product (GDP) in 2025 to 0.7 percent by 2027 while targeting economic growth of 6.6 percent in 2025, gradually declining to 5.6 percent by 2027, mainly driven by the mining sector, particularly copper.
The government also plans to increase domestic revenue from 20.5 percent to 21.2 percent of GDP and maintain an inflation rate of 6-8 percent to curb rising food costs.
Speaking at a media briefing in Lusaka on Thursday, CSPR Executive Director Isabel Mutembo Mukelabai stressed the need for urgent and sound fiscal policies to enhance revenue collection and manage expenditures effectively.
“Failure to navigate these challenges could unintentionally lead to fiscal instability, jeopardizing the macroeconomic targets outlined in the MTBP,” Mukelabai said.
She urged the government to implement a progressive tax system to ensure equitable taxation, reducing the burden on low-income citizens.
Mukelabai also noted that achieving six percent GDP growth in the medium term would be ambitious, given the sharp economic slowdown in 2024, where growth projections dropped to 1.3 percent from an initial 4.5 percent target, in stark contrast to 5.7 percent growth in 2023.
She highlighted that Zambia’s economic recovery would depend on rising copper production, with the government targeting three million metric tonnes annually within nine years, as well as favorable rainfall in the 2024-2025 season.
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