Zambia 2025 Budget – Building resilience for inclusive growth and improved livelihoods

By Kalata News

Lusaka, October, 2025 – THE Zambian Government has this October presented its 2025 Budget premised on economic recovery and promoting growth to improve the livelihoods of Zambians.

The Budget aptly themed “Building resilience for inclusive growth and improved livelihoods” will be aimed at enhancing Zambia’s capacity to withstand social and economic shocks.

This is the fourth Budget under the leadership of President Hakainde Hichilema and its coming after the country underwent what has been termed one of the country’s worst droughts.

Presenting the Budget to Parliament, Minister of Finance and National Development, Situmbeko Musokotwane said of this budget, “The reason why the 2025 Budget is special is because it comes after the extraordinary year of 2024. This is the year when the most severe drought in our living memory unleashed unprecedented socio-economic challenges. Millions of our citizens face food insecurity. They are facing extended hours of load shedding. They have inadequate access to safe and clean water.”

The Minister said Zambia will be building a stronger economy in order for it to be able to deal with any shocks and challenges such as drought.

“The economy is expected to rebound in 2025. This is premised on the recovery of agriculture and a pickup in mining. It is also premised on the continued growth of communication the information and technology, accommodation and food services, and construction sectors.” The Minister said.

THE 2025 BUDGET

The Zambian Government proposes to spend 26.6 percent of GDP (K217.1 billion). Out of this amount, 80.2 percent of the Budget (K174.2 billion) will be financed by domestic revenues while K8.2 billion or 3.8 percent will be grants from our Cooperating Partners.

“The balance of K34.7 billion or 16.0 percent will be financed through borrowing. Domestic borrowing will be K15.4 billion or 7.1 percent while K19.4 billion or 8.9 percent will come from external sources. As a share of GDP, domestic borrowing is projected at 1.9 percent while external borrowing is 2.4 percent. Details of the borrowing are in the Annual Borrowing Plan.

2025 Objectives:

Government has set out the following macroeconomic objectives for 2025, namely a) Attain a real GDP growth rate of 6.6 percent; b) Reduce inflation to the 6-8 percent target band in the medium-term; c) Maintain international reserves above 3.0 months of import cover; d) Increase domestic revenue to at least 21.3 percent of GDP. Others are e) Reduce the fiscal deficit to 3.1 percent of GDP; and f) 28. Limit net domestic borrowing to 1.9 percent of GDP.

Economic Affairs:

In the budget, the Zambian Government proposes to spend 22.4 percent (K48.7 billion) of the Budget on the Economic Affairs function to stimulate economic activity and improve livelihoods.

“Of this amount, K12.0 billion is for construction, upgrade and rehabilitation of roads. Aerial survey for minerals under Aerial Geological and Geophysical Mapping. I have increased the allocation for this exercise to K364.0 million from K160.0 million in 2024.”

The Budget also allocates K15.4 billion to support interventions in the agriculture, fisheries and livestock sub sectors. Of this amount, K9.3 billion is for the Farmer Input Support Programme to benefit over 1 million farmers.

“To ensure food security, I propose to increase the allocation for strategic food reserves to K2.4 billion from K1.7 billion in 2024.”

 

Proposed Tax Measures:

 

The 2025 Budget proposed the following tax measures:

Advanced Income Tax of 15% on Remittances – In order to address the challenge of undeclared income and illicit financial flows, the Budget proposes to introduce an Advance Income Tax at 15 percent on remittances exceeding US $2,000 or its equivalent “ for transactions made without a valid Tax Clearance Certificate.” The Advance Income Tax will also apply on non compliant exporters.

Corporate Tax of 20% – To harmonise the corporate income tax rate, the Budget proposes to revise upwards to 20 percent from 15 percent the corporate income tax rate applicable to profits realised from export of non-traditional products and value addition to copper cathodes.

“The harmonisation is aimed at unifying the income tax regime over the medium-term.”

Selected Goods Surtax  – To support local industries and encourage further investments, I propose to introduce and revise upwards Selected Goods Surtax applicable on imports of specified products which are locally manufactured.

Excise Duty:

Excise Duty of 20% on Tobacco and Tobacco Products – To preserve the value of the respective specific excise duty on tobacco and tobacco products, fuel and used motor vehicles, I propose an automatic annual adjustment indexed to the average inflation rate for the preceding year, which shall be capped at 20 percent.

To introduce excise duty at the rate of 10 percent on the betting amount.

I also propose to increase excise duty on non-alcoholic beverages to K1 per litre from the current 60 Ngwee.

To revise upwards by 20 percent the bands for presumptive tax on operators of motor vehicles for transportation of persons.

Non-Tax Revenue Measures

To introduce a fee of K1,500 on occupational safety and health training offered by the Ministry of Labour and Social Security. I also propose to introduce fees for mine safety and examination, and revise geological survey fees upwards.

I propose to increase fees for foreign artists to K5,000 and K15,000 from K1,778 for SADC and non-SADC based artists, respectively. I also propose to categorise the art promoter licence into international, local, and venue.

 

Inflation:

The country experienced pressure over the past year, registering inflation of 15.6 percent in September this year from 13.1 percent in December 2023. The main drivers were linked to the “drought, which resulted in increased food prices. The Kwacha-US dollar exchange rate, which saw a depreciation of 2.8 percent on a year-to-date basis, has also been a factor in raising inflation.”

To moderate inflationary pressures, the Bank of Zambia tightened monetary policy, raising the Policy Rate to 13.5 percent from 11.0 percent and the statutory reserve ratio to 26.0 percent from 17.0 percent.

Increasing Debt and Budget Deficits:

Zambia has a combined debt of USD 16.58 billion as at end-June 2024. The central Government external debt stock, excluding publicly guaranteed external debt, increased by 4.1 percent to US $15.17 billion from US $14.57 billion at end December 2023. The increase was largely on account of new disbursements from multilateral creditors accumulation of arrears. On the other hand, the publicly guaranteed external debt declined by 1.3 percent to US $1.39 billion from US $1.41 billion at end-December 2023. This was on account of debt service payments by some guaranteed entities.

 

The realignment of the Budget, the deficit is now expected to be 6.4 percent of GDP compared to the initial estimate of 4.8 percent of GDP.

 

Banking Lending Rates:

 

Commercial banks’ average nominal lending rates rose to 28.7 percent in August 2024 from 26.6 percent in December 2023 in line with the upward adjustment in the policy rate. Notwithstanding the increase in lending rates, credit to the private sector was noted to have been expanding, growing by 36.9 percent in July this year compared to 34.2 percent in July 2023. The bulk of the credit went to wholesale and retail trade, manufacturing, and agriculture sectors.

 

Imports and Exports:

 

Preliminary data indicate that imports amounted to US $4.5 billion during the first half of this year, 2.7 percent lower than the corresponding period in 2023. Exports were broadly unchanged at US $5.3 billion during the same period. Most of the export earnings were from copper, driven by higher prices, while non-traditional export earnings from commodities such as cane sugar declined.

 

Copper production:

Copper production in the first half of 2024, increased by 6.2 percent to 346,747 metric tonnes from 326,408 metric tonnes produced in 2023 during the same period under review.

“I am very hopeful that this rebound marks the start of our consistent journey towards the target of three million tonnes of copper production. With the profound interest that we see in the expansion of existing mining assets, the development of new mines and the expansion in mineral explorations, I have no doubt that we shall reach the target.” Said Minister Musokotwane.

Energy:

Zambia’s dependence on hydropower generation, at 84 percent, has exposed the country’s vulnerability to climate change events. Due to the drought, the current generation capacity is said to have significantly reduced to around 1,225 megawatts against the installed capacity of 3,811 megawatts.

“This under generation is responsible for the shortage of electricity. Government is implementing the net-metering initiative to encourage consumers to generate power and supply excess to the national grid. Further, in June this year, Government launched the Energy Single Licensing System to streamline the licensing process. This will reduce the period applicants take to obtain licenses and permits for energy projects.” Explained Minister Musokotwane

Manufacturing Sector:

The manufacturing sector is said to have been growing. However, this year, it has been adversely affected by the shortage of electricity due to the drought. According to preliminary data, the sector grew by 4.0 percent in the first quarter but contracted by 2.7 percent in the second quarter.

To support the growth of the sector, Government will continue to develop multi-facility and special economic zones. So far this year, the Lusaka South Multi-Facility Economic Zone is said to have secured US $110 million in investment from 15 companies bringing the cumulative investment to US $1.6 billion.

“Currently, the Zone has 30 fully operational companies, which have created about 16,000 jobs for our people. Further, 21 companies are at construction stage and have created 8,450 jobs. The Jiangxi Multi Facility Economic Zone in Chibombo has attracted investment in excess of US $40 million in the production and recycling of batteries and manufacturing of copper cables, thereby creating more than 400 jobs.” Said the Minister.