The International Monetary Fund (IMF) issued a press release on 22 May 2015 following discussions with Zambia under Article IV of its articles of association.
Although Zambia has strong growth potential economic growth has slowed. Growth was down to 5.6% in 2014 from 6.7% in2013 as a result of a contraction in copper production. The fiscal deficit remains rather high at 6% of GDP in 2014. The IMF considers however that the government’s decision to facilitate VAT refund claims by exporters and to scrap the new fiscal regime for mining could help copper production and economic growth.
The IMF also welcomed the government’s revenue efforts including restraining the wage bill, targeting social spending, broadening the tax base and stabilizing the pension regime. The IMF welcomed the rescission of the royalty-based mining fiscal regime and urged the government to quickly resolve the issue of outstanding VAT refund claims by exporters.
The IMF considers that Zambia should promote employment, growth and economic diversification by limiting labor costs and creating a stable regulatory environment. Action should also be taken to address infrastructure problems, develop skills and rationalize farm subsidies.
