HIV/AIDS is the nation's greatest challenge, with 16% prevalence among the adult population. HIV/AIDS will continue to ravage Zambian economic, political, cultural, and social development for the foreseeable future.

Once a middle-income country, Zambia began to slide into poverty in the 1970s when copper prices declined on world markets. The socialist government made up for falling revenue by increasing borrowing. After democratic multi-party elections, the Chiluba government (1991-2001) came to power in November 1991 committed to an economic reform program. The government was successful in some areas, such as privatization of most of the parastatals, maintenance of positive real interest rates, the elimination of exchange controls, and endorsement of free market principles. Corruption grew dramatically under the Chiluba government. Zambia has yet to address effectively issues such as reducing the size of the public sector and improving Zambia's social sector delivery systems.

Zambia's total foreign debt stood at about $7 billion when Zambia reached the Highly Indebted Poor Countries Initiative (HIPC) completion point in April 2005. Once debt cancellation under HIPC is completed, almost $5 billion in debt will be eliminated. Initially, Zambia hoped to reach the HIPC completion point, and benefit from substantial debt forgiveness, in late 2003. In January 2003, the Zambian Government informed the IMF and World Bank that it wished to renegotiate some of the agreed performance criteria calling for privatization of the Zambia National Commercial Bank and the national telephone and electricity utilities. Although agreements were reached on these issues, subsequent overspending on civil service wages delayed Zambia's final HIPC debt forgiveness from late 2003 to early 2005.

The Zambian economy has historically been based on the copper-mining industry. Output of copper had fallen, however, to a low of 228,000 metric tons in 1998, after a 30-year decline in output due to lack of investment, low copper prices, and uncertainty over privatization. Following privatization of the industry, copper production rebounded, reaching 398,000 metric tons in 2004. Improvements in the world copper market have magnified the effect of this volume increase on revenues and foreign exchange earnings.

The Zambian Government is pursuing an economic diversification program to reduce the economy's reliance on the copper industry. This initiative seeks to exploit other components of Zambia's rich resource base by promoting agriculture, tourism, gemstone mining, and hydro power.