CSPR Warns of Risks in Zambia’s 2025-2027 Budget Plan

Ms. Isabel Mukelabai, Executive Director, Civil Society for Poverty Reduction

By Francis Maingaila

Lusaka, Thursday, 6th February 2025 – The Civil Society for Poverty Reduction (CSPR) has raised concerns over Zambia’s 2025-2027 Medium-Term Budget Plan (MTBP), warning that its ambitious economic targets face significant risks.

Executive Director Isabel Mutembo Mukelabai said the government’s reliance on copper exports, a growing debt burden, and rising inflation could undermine fiscal stability and social development.

She noted that the government projects 6.6% economic growth in 2025, driven by increased copper production, but cautioned that this assumption depends on stable global commodity prices, estimated at $10,195 per tonne.

She warned that any downturn in copper prices or unfavorable weather conditions affecting agriculture could derail the country’s growth targets.

“The heavy dependence on copper exports exposes the economy to external shocks. If global prices fall or production targets are not met, Zambia could struggle to maintain projected growth,” Mukelabai said.

Debt servicing, she said, remains a major concern, with K147.8 billion allocated for interest payments, including K126.7 billion for domestic debt and K21.2 billion for external obligations.

She warned that this expenditure limits the government’s ability to fund essential services and development programs.

“The rising debt burden reduces fiscal space for social and economic investments. Without a strong debt management strategy, Zambia risks diverting resources away from critical sectors,” she said.

Mukelabai also pointed to food inflation, which stood at 19.2% in January 2025 due to kwacha depreciation, as a major challenge affecting household incomes and poverty reduction efforts.

She stressed the need for measures to stabilize prices and increase local production.

“The high cost of food disproportionately affects low-income families. The government must implement policies that support domestic food production and stabilize the currency to protect vulnerable communities,” she said.

Despite these challenges, Mukelabai acknowledged the government’s commitment to social investment.

She noted that the MTBP allocates K49.2 billion for social protection programs, including K29.0 billion for the Social Cash Transfer Program benefiting 1.5 million low-income households.

In education, she highlighted the K12 billion set aside to build and rehabilitate 1,000 schools and recruit 20,000 teachers.

She also pointed to the K15 billion allocated to health for constructing 300 facilities and hiring 10,000 healthcare workers.

However, she stressed that successful implementation would require fiscal discipline, transparency, and economic diversification.

She urged the government to strengthen revenue collection and ensure the MTBP aligns with the 8th National Development Plan.

“The government must take a consultative approach, engage stakeholders, and create a more resilient economy beyond mining,” Mukelabai said.

“Without sound fiscal policies and effective implementation, these ambitious targets may not be achieved.”

She called for urgent reforms to improve economic stability and ensure that the budget plan delivers tangible benefits to all Zambians.