28/08/2026
STATEMENT ON ZAMBIA'S DEBT RESTRUCTURING
DEBT RESTRUCTURING CUTS DEBT SERVICE, RELEASES FISCAL SPACE FOR DEVELOPMENT
Zambia’s debt restructuring has sharply reduced external debt-service pressures and created additional fiscal space for social protection, infrastructure and other development priorities, Secretary to the Treasury FELIX NKULUKUSA, has said.
THE NUMBERS
- External debt service:
About US$900 million annually AFTER restructuring, compared with an estimated US$2.6 billion annually without restructuring.
- Domestic revenue burden:
External debt service has fallen to roughly K15 of every K100 collected, from about K70 of every K100 before restructuring.
- IMF financing:
Approximately US$1.7 billion accessed under the Extended Credit Facility, including about US$400 million in additional financing to help mitigate the 2023/2024 drought.
- International reserves:
Increased from around US$3 billion in 2021 to about US$6.5 billion at end-June 2026.
- Fiscal deficit:
Declined from about 9% of GDP in 2021 to 3.8% in 2025.
HOW ZAMBIA GOT HERE
Zambia defaulted on its external debt in November 2020 after previous years of rising borrowing, weak economic growth and mounting external pressures.
The debt-to-GDP ratio increased from about 48% in 2016 to 128% in 2021, while economic growth averaged around 2.1%. Debt to GDP ratio is now around 83%.
With external debt service absorbing nearly K70 of every K100 collected domestically and the public-service wage bill requiring roughly K43, restructuring became essential to restore debt sustainability and protect critical public services.
THE FISCAL-SPACE DIVIDEND
The reduction in debt-service requirements is allowing the Government to direct more resources toward:
- Free education;
- Health;
- Agriculture;
- Social protection;
- Infrastructure;
- Constituency Development Fund; and,
- Public services.
The shift marks the central economic dividend of restructuring i.e. moving public resources from excessive debt repayments toward productive and social investment.
MACRO STABILITY
Mr. NKULUKUSA said debt restructuring, the IMF-supported reform programme and broader fiscal measures have helped strengthen confidence and macroeconomic stability.
Inflation has returned to the 6%–8% budget target range, while the Kwacha has stabilised at around K19 per US dollar.
Economic growth has averaged approximately 4% over the past five years, thus providing a stronger platform for investment, production and employment creation.
INVESTMENT PIPELINE
Between 2021 and June 2026, the Zambia Development Agency issued more than 2,300 investment licenses valued at about US$97 billion.
Approximately US$19 billion is estimated to have been actualized, facilitating around 150,000 jobs across mining, manufacturing, agriculture, energy, seed production and other productive sectors.
The policy focus now is converting the wider investment pipeline into operating businesses, exports, jobs and household incomes.
CITIZEN IMPACT
The emerging fiscal space is already supporting expanded public programmes:
- School feeding:
From about 2.3 million learners in 70 districts in 2021 to more than 5.1 million children across all 116 districts;
- Social Cash Transfer:
From approximately 880,000 households in 2021 to around 1.6 million households, with the transfer value rising from K200 to K400 per month.
- Cash-for-Work:
Close to 2.9 million beneficiaries across all 116 districts.
- Public-service recruitment:
More than 74,000 personnel recruited since 2021 across education, health, policing, defense and wildlife protection etc.
These interventions are expanding access to education, health care, social protection and public safety while supporting employment and household welfare.
WHAT COMES NEXT
Zambia is moving from debt stabilization to growth ex*****on.
The next phase increasingly depends on private-sector investment in mining, manufacturing, agriculture and energy translating etc into jobs, higher productivity, stronger incomes, exports and improved household purchasing power.
“Debt restructuring has given Zambia breathing space. Our responsibility is now to protect these gains through fiscal discipline, prudent borrowing and productive investment that improves people’s lives,” Mr. NKULUKUSA said.
In conclusion, Zambia is paying substantially less to service restructured external debt.
The policy test now is whether the resulting fiscal space and restored stability can be converted into sustained investment, employment and measurable improvements in household living standards.
Ministry of Finance and National Planning, , Lusaka-Zambia
