“In the Extended Credit Facility (ECF) 4ECF24, the IMF praised Zambia’s commitment to social spending
as “a cornerstone of efforts to mitigate the socioeconomic impacts of the drought and the cost-of-living
crisis”, and noted that: “Redirecting expenditure away from inefficient subsidies to education, health, and
social protection will help build human capital.” BUT when it came to the budget tables, social spending
remained frozen and was projected to drop again (at least in percentage GDP terms).”
This is one of the conclusions of the new report “Still Cooking with a Failed Recipe” by Action Aid, that reviews IMF country advice on social spending, public services, debt, tax and gender equality in eleven countries.
In 2025, the IMF stated that: “The government is prioritizing the allocation of newly hired teachers and health professionals to poorly serviced rural areas. Despite the undeniable benefits, the free [primary and secondary] education policy has led to an influx of learners where infrastructure, availability of teachers, and learning outcomes were already under pressure. Spending in health and education is expected to increase, with plans to hire 2,000 teachers and 2,000 health workers.” It was not clear if these were new or replacement staff, due to the lack of detailed data. It appeared that the IMF only agreed because the Hichilema Administration made this a priority. However, the overall spending on the wage bill is still projected to reduce as a percentage of GDP so it is hard to see how these exceptions will be sustained.
Since the Zambian government has a a strong focus on social spending, the IMF documents on the country include considerable detail on different tax measures. While no distributional impact assessment is conducted (and progressivity is not explicitly mentioned), all in all, the tax package seems reasonably progressive, with changes made to personal income tax to alleviate inflation pressures on low- and middle-income households, while taxes are raised on property and rental income, gemstone exports, oil pipeline use, and sending money abroad above USD 2k (presumably mostly hitting higher income earners and large / multi-national corporations). Excises raised on tobacco, alcohol and gambling are usually positive from a gender perspective.
