Debt Restructuring Frees Up Zambias Revenue For Development

By Ellen Hambuba Government says Zambia’s debt restructuring has significantly reduced pressure on the Treasury, with the share of domestic revenue going towards external debt service falling from 70 Kwacha out of every 100 to about 15 Kwacha. Secretary to the Treasury FELIX NKULUKUSA says the reduction has created fiscal space for increased investment in free education, health, agriculture, social protection, infrastructure and other public services. Mr. NKULUKUSA says before restructuring, Zambia’s debt burden had become unsustainable, with the country’s debt-to-GDP ratio rising from 48 percent in 2016 to 128 percent in 2021, amid weak economic growth and other economic shocks. He says Zambia would have been paying an estimated 2.6-billion United States dollars annually in external debt service without restructuring, but payments from 2026 onwards are now expected to average about 900-million dollars per year. Mr. NKULUKUSA says the debt restructuring has been complemented by the IMF Extended Credit Facility, under which Zambia accessed about 1.7-billion dollars, including 400-million dollars in additional financing to cushion the impact of the 2023/2024 drought. He says the reforms have also helped rebuild international reserves from about three-billion dollars in 2021 to 6.5-billion dollars at the end of June 2026. Mr. NKULUKUSA says the combination of debt restructuring and economic reforms has contributed to the stabilization of the Kwacha at around 19 Kwacha to the United States dollar, while inflation has returned to the six-to-eight percent budget target range. He says average economic growth has been about four percent over the last five years, while the fiscal deficit declined from nine percent in 2021 to 3.8 percent in 2025. The Secretary to the Treasury says improved confidence in the economy has also supported private-sector investment, with more than 2,300 investment licences worth approximately 97-billion dollars issued between 2021 and June 2026. He says about 19-billion dollars of those investments has already been actualized, supporting an estimated 150,000 jobs across mining, manufacturing, agriculture, energy, seed production and other productive sectors. Mr. NKULUKUSA says the next phase is to ensure that macroeconomic stability translates into more jobs, higher incomes, increased productivity and stronger household purchasing power. He says Zambia must protect the gains from debt restructuring through fiscal discipline, prudent borrowing and productive investment, describing the debt restructuring as having given the country “breathing space” to pursue sustained economic transformation This is contained in a statement issued by the Secretary to the Treasury FELIX NKULUKUSA.