2025 NATIONAL BUDGET ANALYSIS

The Minister of Finance and National Planning, Dr Situmbeko Musokotwane, unveiled a K217.11 billion budget on Friday, 27th September 2025, under the theme “Building Resilience for Inclusive Growth and Improved Livelihoods.” This year’s theme indicates the Government’s commitment to stimulate economic growth and mitigate the impact of the drought on livelihoods through key revenue and expenditure measures. The budget was presented in a an environment characterised by high expectations from citizens, who see it as a solution to the current socioeconomic challenges facing the country due to the drought. The drought has resulted in prolonged load shedding hours, reduced agricultural productivity, and a significant increase in the cost of living, profoundly affecting the livelihoods of many citizens and adversely impacting macroeconomic indicators. The extended hours of load shedding, combined with diminished productivity in critical economic sectors such as agriculture, led to a downward revision of the 2024 economic growth projection from 4.8% in the initial 2024 budget speech to 2.3% in the 2024 supplementary budget. Regarding macroeconomic performance indicators, inflation had surged to 15.6% by September 2024, primarily driven by food price increases and currency depreciation. The kwacha’s 2.8% depreciation against the US dollar in 2024, along with inflationary pressures stemming from the drought, has eroded the purchasing power of Zambians. Additionally, the country’s external debt stock rose to US$15.17 billion by mid-2024, presenting a significant challenge. However, progress in debt restructuring, particularly with official creditors and bond holders, represents a step towards fiscal stability and long-term debt sustainability. In addition to the domestic economic environment shaping the budget, there are also critical global factors influencing its implementation. According to the World Bank’s 2024 Global Economic Prospects report, the global economy is stabilising, but the outlook remains subdued for both advanced economies and emerging markets, with growth projected to be slower over 2024-2026 compared to the pre-pandemic decade. The June 2024 International Monetary Fund (IMF) report noted that the global economy is stabilising after several years of overlapping negative shocks. Despite elevated financing costs and increased geopolitical tensions, global activity showed signs of improvement in early 2024; global growth is expected to reach a slightly faster pace this year than previously anticipated, mainly due to the continued solid expansion of the U.S. economy. Nonetheless, projected declines in global growth are expected to remain stable at 3.2% in 2024 and 3.3% in 2025. Despite these challenges, Zambia has made significant progress in its efforts towards economic recovery and transformation. The mining sector has seen a revival, with longstanding issues at Konkola and Mopani Copper Mines being resolved, alongside the entry of new investors in both mining and nonmining sectors. Infrastructure development continues to be a Government priority, with investments in road construction and the expansion of social amenities reflecting its commitment to inclusive growth. In this context, the 2025 PMRC budget analysis will focus on expenditures, policy options, and measures proposed to restore economic growth and improve livelihoods in light of the drought experienced in 2024. A critical component of the 2025 budget is the revenue measure, with the Government aiming to fund 80.2% of the budget through domestic resource mobilisation, making it the highest proportion of locally funded budgets ever recorded.

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