Key takeaways
- External debt service now absorbs about K15 of every K100 collected in domestic revenue, down from nearly K70 before restructuring, according to Secretary to the Treasury Felix Nkulukusa.
- Annual external debt-service payments fall to roughly US$900 million from 2026, against the estimated US$2.6 billion Zambia would have owed each year without a deal.
- The Treasury says the freed cash has funded free education, school feeding for 5.1 million learners, Social Cash Transfers for 1.6 million households and more than 74,000 new public-sector recruits.
- International reserves have rebuilt from about US$3 billion in 2021 to US$6.5 billion at the end of June 2026, supported by about US$1.7 billion drawn under the IMF Extended Credit Facility.
- The fiscal deficit narrowed from 9 percent of GDP in 2021 to 3.8 percent in 2025, on the Treasury’s own figures.
Zambia is now spending about K15 of every K100 it collects in domestic revenue on external debt service. Before the restructuring, that figure was close to K70. Secretary to the Treasury Felix Nkulukusa gave the accounting while reflecting on the country’s default and recovery, and it is the clearest single measure of what the debt workout has changed: money that once left the Treasury for creditors is now paying for teachers, school meals and cash transfers.
Mr Nkulukusa traced the road to the 2020 default, the numbers behind the recovery, and what the Treasury intends to protect as Zambia enters what he called the next phase of its economic transformation. His account is the government’s own, and it is worth reading as such. But the underlying figures, several of them verifiable against Bank of Zambia and IMF records, describe a genuine shift in the public finances.
How Zambia got to the default
Zambia defaulted on its external debt in November 2020, the first African country to do so during the COVID-19 era. Mr Nkulukusa attributed the default to weaknesses that predated the pandemic: excessive borrowing, subdued growth, declining copper prices, the electricity shortages that began in 2015, high inflation and persistent depreciation of the kwacha.
The arithmetic was unforgiving. Debt rose from 48 percent of GDP in 2016 to 128 percent in 2021, while growth averaged 2.1 percent. Before restructuring, nearly K70 of every K100 collected in domestic revenue went to external debt service, and a further K43 or so was needed for public-service salaries. That left almost nothing for anything else.
“Debt restructuring was therefore not optional,” Mr Nkulukusa said. “It was essential to restore sustainability, protect essential public services and prevent the debt burden from suffocating the economy.”
What the restructuring changed
The headline change is the debt-service bill. External payments from 2026 onwards run at approximately US$900 million a year, against the estimated US$2.6 billion Zambia would have paid annually without a deal. The IMF’s independent Debt Sustainability Analysis provided the basis for the treatment eventually agreed with official and commercial creditors under the G20 Common Framework.
Zambia accessed about US$1.7 billion under the IMF Extended Credit Facility, including roughly US$400 million in additional financing after the 2023/2024 drought. The programme provided balance-of-payments support and, in the Treasury’s telling, rebuilt credibility with creditors. International reserves rose from about US$3 billion in 2021 to US$6.5 billion at the end of June 2026.
| Indicator | Before restructuring | Now |
|---|---|---|
| External debt service per K100 of revenue | ~K70 | ~K15 |
| Annual external debt payments | ~US$2.6 billion (projected) | ~US$900 million |
| Debt-to-GDP ratio | 128% (2021) | Declining under IMF programme |
| Fiscal deficit | 9% of GDP (2021) | 3.8% (2025) |
| International reserves | ~US$3 billion (2021) | US$6.5 billion (June 2026) |
| Inflation | High and rising into 2021 | Back within the 6-8% target band |
Where the freed money went
The fiscal space created by lower debt service is visible in social spending. School feeding now reaches more than 5.1 million learners in all 116 districts, up from about 2.3 million learners in 70 districts in 2021. The Treasury says the free-education policy and the expanded feeding programme have eased financial pressure on families across the country.
Social Cash Transfer coverage has grown from just over 880,000 households a year to about 1.6 million, while the monthly transfer value doubled from K200 to K400. The Cash-for-Work programme now benefits close to 2.9 million people, again across all 116 districts.
On the employment side, the government has recruited more than 74,000 public servants since 2021: roughly 43,000 education personnel, more than 18,300 health workers, about 3,000 police officers, over 11,000 defence personnel and more than 530 wildlife protection officers, among others.
Investment, jobs and the kwacha
Mr Nkulukusa linked the recovery in confidence to private investment. Between 2021 and June 2026, the Zambia Development Agency issued more than 2,300 investment licences valued at approximately US$97 billion. An estimated US$19 billion has been actualised, supporting around 150,000 jobs across mining, manufacturing, agriculture, energy and seed production.
On the macroeconomic markers, the Treasury credits the combination of restructuring and reform with stabilising the kwacha at around K19 to the United States dollar, returning inflation to the 6-8 percent budget target band, and average growth of about 4 percent over the last five years. Inflation at 6.2 percent in July, as reported by ZamStats, is consistent with that account.
“With inflation contained, prices are rising more slowly, providing a firmer foundation for investment, sustained economic growth, and improved livelihoods,” he said.
What happens next
The Treasury’s own framing is cautious. Mr Nkulukusa said the benefits many Zambians are already experiencing will become more visible as investments mature, and he projected stronger employment creation as mining, manufacturing, agriculture and energy projects become operational. The test he set for the next phase is whether macroeconomic stability translates into jobs, higher incomes and stronger household purchasing power.
“Debt restructuring has given Zambia breathing space,” he said. “Our responsibility is to protect these gains through fiscal discipline, prudent borrowing and productive investment that improves people’s lives.”
That responsibility is the part no restructuring can guarantee. Breathing space is only useful if it is used, and the record of the K70-to-K15 shift will ultimately be judged by what ordinary Zambians earn, pay and receive in return.
Related reading
- Zambia’s Debt Restructuring, Two Years On: What Changed for Bondholders
- The Four Pillars of Zambia’s Revenue Strategy, and the Gap They Have to Close
- Life After the IMF: What a New Programme Could Mean for Zambia
- IMF Congratulates Hichilema, Signals Support for Zambia’s Next Reform Phase
- Zambia’s External Debt Dependence Is Shifting to Domestic Capital Formation
- Zambia’s Debt-for-Energy Swap Explained
- Treasury Releases K21.1 Billion for July Services and Debt
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