Zambia is poised for its strongest economic growth in 13 years in 2025 as it recovers from the most severe drought in over a century. According to Finance Minister Situmbeko Musokotwane’s budget plan released on Friday, the country’s gross domestic product (GDP) is projected to expand by 6.6% in 2025, following an estimated growth of 2.3% this year. This marks the fastest growth rate since 2012, aligning with forecasts from the International Monetary Fund (IMF).
Musokotwane emphasized that the 2025 budget focuses on economic recovery and growth aimed at enhancing the livelihoods of Zambians. The drought, exacerbated by the El Niño phenomenon, severely impacted agriculture, reduced farm output, and triggered an energy crisis due to decreased hydropower supply, leading to extended power cuts for businesses and households. This situation arose as the government was working to complete a debt restructuring process that began in 2020, making Zambia the first African nation to default on its sovereign debt during the pandemic.
The government has had to revise this year’s budget significantly to increase funding for drought response initiatives, including social welfare payments and cash-for-work programs to support affected individuals. In June, the IMF agreed to enhance its loan program by approximately $388 million, while the government has sought further assistance from the World Bank.
Next year, Zambia is expected to benefit from the La Niña weather phenomenon, which typically brings normal or above-normal rainfall. However, the prolonged dry conditions and economic downturn continue to strain public finances as the government resumes servicing its restructured loans.
The budget deficit is now projected to widen to 6.4% of GDP in 2024, up from a prior estimate of 4.8%. The government aims to reduce this shortfall to 3.1% of GDP in the following year.