The Zambian economy was in a precarious state during the 1990s. High inflation, severe drought, declining export prices, and failed economic policies all took their toll. Four of the nation's 20 banks failed and total debt stood at $7 billion in 1999. Divided into the population, that was $700 of debt per capita, compared with a GDP per capita of only $380. After steady declines in per capita GDP, Zambia was redesignated a least developed country by the United Nations. The impact of inflation on the poor, the middle class, and business eroded public support for the government's reform policies. Economic reforms aimed at privatizing the economy succeeded in selling approximately 85% of 330 parastatal companies, including the main copper mining conglomerate Zambia Consolidated Copper Mines (ZCCM) in 2000.
The first sign that tight monetary and fiscal policies were beginning to have an effect, was a rapid drop in the inflation rate, but by 1998, the rate had raised from 19% in 1997 to 31%. It was forecast to remain at around 20% in 2002. After the drought of 1992, agricultural production rebounded with record harvests of many crops, but the government's tight cash budget policy limited its capacity to purchase the crops. The key copper industry (which took in 80% of export revenues in 1999), maintained production levels, but depressed world prices kept revenues at lower levels. However, in 2000, copper export earnings reached $800 million, a 5.4% increase over 1999. As of 2003, there was growing interest in developing coffee and tobacco as cash crops, but the main agricultural product is maize, a non-cash crop necessary for domestic consumption. The tourism industry is growing. In 2000 Zambia became eligible for $3.8 billion in debt relief under the IMF/World Bank Heavily Indebted Poor Countries (HIPC) initiative.