Context
Zambia has enjoyed impressive economic growth in recent years. Despite this, it has not been possible to reduce widespread poverty and reduce inequalities. In 2022, 60 per cent of the population lived below the poverty line, and almost half were living in extreme poverty. In
addition, women are often disadvantaged; climate change has an impact on agricultural production and hydropower generation. This is increasing
Zambia#s funding shortfall: the country does not have sufficient funds
of its own to implement important projects.
After years of increasing budget deficits, Zambia was no longer able to
service its foreign debt in November 2020. In September 2022, a
programme was therefore agreed with the International Monetary Fund
(IMF). In it, the Zambian Government committed to ambitious reforms in
the public finance system.
Objective
Zambia is reforming its public finances, giving it the financial leeway
to utilise public funds in a development-oriented manner, and reduce
poverty and inequality.
Approach
The programme advises the government on reforms and operates in four areas:
# It promotes fiscal sustainability through improved budget planning,
risk and debt management. It also provides advice on implementing a
decentralised financial structure with more powers for the
municipalities.
# It improves efficiency in the use of resources and is committed to
taking greater account of gender equality and climate projects in
government spending.
# It supports in mobilising domestic revenue in order to create a fairer
and more efficient tax policy and increase the tax compliance rate.
# It promotes change management and organisational development as well
as in professionalising the public sector so that reforms can be better
managed and implemented.
The European Union and USAID are contributing financially to the
project.
Last update: March 2024