Debt Red Flags

New Analysis Reveals Zambia’s Debt Sustainability Remains Under Severe Pressure Despite G20 Restructuring; CSPR Calls for Reforms to Avert Further Economic Strain

By Francis Maingaila ♥️

Lusaka, Zambia24 — (15 November 2025) --

Zambia’s public debt remains in a state of high distress despite the country’s ongoing restructuring efforts under the G20 Common Framework, according to a new analysis presented by Civil Society for Poverty Reduction (CSPR) researcher Trevor Hambayi.

Speaking during a stakeholders’ engagement on debt transparency and sustainability, Hambayi said the country continues to “walk a tightrope” as key risk indicators show that Zambia’s debt remains unsustainable and highly vulnerable to external shocks.

According to the CSPR analysis, Zambia’s total public debt stood at USD 30.67 billion as of June 2025, comprising USD 15.78 billion external debt, USD 10.21 billion domestic debt, USD 3.31 billion in arrears, and USD 1.37 billion in government guarantees.

Hambayi noted that prior to defaulting in 2020, Zambia had already breached several critical Debt Sustainability Analysis (DSA) thresholds, with external debt levels surpassing 100 percent of GDP—more than double the recommended 40 percent ceiling. Debt service obligations to government revenue also exceeded 40 percent, far above the safe 23 percent threshold.

“These indicators clearly demonstrate that Zambia entered the restructuring process in a severely distressed state. Even now, despite ongoing discussions with creditors, progress remains slow, and the risks remain high,” Hambayi said.

The report highlights structural weaknesses in the G20 Common Framework, including the absence of clear timelines, procedural delays, and limited mechanisms to protect countries from new shocks during negotiations. Zambia waited 28 months from its default to IMF programme approval, followed by another 18 months before reaching agreement with official creditors.

Hambayi warned that the prolonged negotiations had constrained Zambia’s fiscal space—delaying key investments and limiting social spending, particularly in health and education.

He added that the country’s debt remains highly sensitive to fluctuations in the exchange rate, copper prices, and GDP growth.

 A 30 percent depreciation of the kwacha or a 15 percent decline in copper prices would significantly worsen debt sustainability.

The analysis also compared Zambia’s experience with other countries under the Common Framework, including Ghana and Ethiopia, and noted that although Zambia secured extended maturities and lower interest rates, the overall relief remains insufficient to fully stabilise the economy.

CSPR further identified several longstanding failures in Zambia’s debt management system, including lack of transparency in loan contracting, weak institutional oversight, and the abandonment of prudent borrowing strategies.

To restore long-term stability, the organisation recommended stronger governance reforms, enhanced debt transparency, establishment of a sinking fund for future repayments, and economic diversification through value addition in minerals and agriculture.

“Zambia cannot afford to repeat past mistakes,” Hambayi said. 

“Debt sustainability is not just a technical matter—it affects every Zambian. We must ensure that future generations are not burdened by the decisions we make today.”

The CSPR report comes at a critical time as the government prepares for further negotiations with private creditors and continues to implement economic reforms under the IMF Extended Credit Facility.

The Civil Society for Poverty Reduction (CSPR) warned that Zambia’s escalating public debt—now consuming nearly 70 percent of national spending priorities—poses a serious threat to economic stability, urging lawmakers to strengthen oversight and adopt more transparent debt-management practices. 

"This was the central issue discussed during an engagement meeting held yesterday, bringing together legislators, civil society organisations, and economic researchers."

Speaking during the opening session, CSPR Programs Manager Brian Mwanawamoyo, who was representing Executive Director Isabel Mukelabai while she was away on national duty, said the meeting was convened to deepen lawmakers’ understanding of Zambia’s debt crisis, equip them with current research evidence, and create an advisory platform for accountability and policy reform. 

He explained that the study being presented, commissioned in September 2025, comes at a critical moment when Zambia’s fiscal position “could not be more fragile.”

According to the findings, Zambia is currently spending an estimated K73.7 billion on debt-related obligations, a figure that continues to squeeze allocations toward essential public services. 

“When we talk about debt, we are not merely speaking about interest rates or loan maturity extensions,” Mwanawamoyo said. 

“We are speaking about the direct impact on every Zambian family, the credibility of our fiscal institutions, and our shared ambition for inclusive development.”

CSPR explained that the goal of the meeting was not only to raise concern but to produce actionable recommendations. 

The organisation outlined three objectives: strengthening public understanding of debt management, building the capacity of lawmakers to engage effectively on economic policy, and promoting evidence-based reform proposals that ensure accountability in government borrowing and spending.

The engagement also examined the implications of Zambia’s ongoing cooperation with the IMF Extended Credit Facility and the opportunities under the G20 Common Framework for debt treatment.

 He highlighted the need for policymakers to prioritise transparency, fiscal discipline, and responsible debt contraction, especially ahead of the 2026 election period when governments often face pressure to increase politically motivated expenditure.

“Zambia’s public debt must become a tool for development, not a source of hardship,” Mwanawamoyo said, calling on lawmakers to take a leading role in oversight reforms.

The organisation further committed to consolidating findings from recent studies and community consultations to amplify citizen voices in economic governance. 

CSPR also proposed a policy agenda centred on five key areas: transparent fiscal governance, strengthened fiscal health, engagement with international debt frameworks, enhanced domestic analytical capacity, and investment in inclusive development.

As Zambia confronts growing fiscal pressure, stakeholders at the meeting agreed that sustained collaboration between government, Parliament, civil society, and international partners is essential to safeguard economic stability and protect the welfare of citizens.