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.

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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Six days from now, Zambians vote. By most measures this is one of the most closely watched elections on the continent this year, not for its uncertainty but for the opposite reason: markets have already made up their minds about the likely outcome, and are now pricing what comes after it.

Zambia’s local currency bonds have returned about 36 percent in dollar terms so far this year, the best performance of any emerging market Bloomberg tracks. That is not a typical election year number. It reflects a five year story that began with a sovereign default, moved through a difficult debt restructuring, and has settled into what international investors now treat as a credible, if fragile, recovery. President Hakainde Hichilema is widely expected to win a second term against a fragmented opposition led by Brian Mundubile. The rally in Zambian bonds is, in large part, a bet that policy continuity survives 13 August intact.

That bet comes with conditions attached, and this is where the arithmetic gets more interesting than the politics.

The IMF question

Zambia’s previous 1.7 billion dollar IMF programme, which underpinned the 2024 debt restructuring, ended in January. Investors see a new programme as the clearest available signal of whether the reform path continues or drifts. A government that moves quickly to a successor arrangement after polling day tells one story. A government that delays, or negotiates from a weaker fiscal position than it inherited, tells another. Either way, the first weeks after the election matter more to bondholders than the vote itself.

A wider deficit than planned

The government’s original target for the 2026 fiscal deficit was 2.1 percent of GDP. Standard Chartered now forecasts something closer to 5 percent, and the reasons are worth sitting with because they are not really about the election at all. An El Nino driven drought has cut hydropower generation, forcing emergency power imports that are running at roughly 50 million dollars a month. At the same time, a bumper maize harvest, up an estimated 28 percent year on year, is pushing farmers’ surplus back onto a grain market where government remains the buyer of last resort. Both pressures existed before the campaign started and will still be there after the results are announced. The question investors are asking is whether the next administration shifts grain marketing toward private buyers, which would ease the fiscal strain, or keeps the state absorbing the surplus, which would not.

Copper, still the anchor

Zambia is Africa’s second largest copper producer, and that fact alone keeps the country on the radar of mining majors and, increasingly, of governments in the US, UK and Australia racing to secure critical mineral supply chains outside China. Regulatory certainty, not political drama, is what this constituency of investor cares about most. A smooth, credible election result is worth more to that group than any single policy promise made on the campaign trail.

The other side of the ledger

None of this is happening in a vacuum for households and small businesses. Extended load shedding, in places running to twenty hours a day, has real costs that do not show up cleanly in a bond yield. The opposition’s pitch, built around drawing on the country’s roughly 6.5 billion dollar foreign exchange reserves to cushion the price of mealie meal, fuel and electricity, is a direct response to that lived experience. It is also, in the assessment of most market analysts, a path that raises the risk of kwacha depreciation and could complicate talks with the IMF. That trade off, between near term relief and medium term stability, is the real choice on the ballot, whichever names appear on it.

What to watch after 13 August

For anyone trying to read the economy rather than the politics in the days ahead, three signals will say more than any victory speech: how quickly a new IMF engagement is announced, whether the 2026 budget is revised to reflect the wider deficit honestly rather than papered over, and what, if anything, changes in how the state buys and sells maize. The bond market has already told you what it expects. Whether that expectation holds is now a matter of delivery, not forecasting.

This piece is part of the Zambian Economist series on the economics of the 2026 general election. It does not grade parties or candidates; it sets out the numbers and lets readers draw their own conclusions.

Related reading:

• The Economics of Zambia’s 2026 Election
• Two years on: the Eurobond restructuring
• Zambia’s fiscal deficit and the IMF
• Zambia’s copper FDI pipeline

Also read: Kelvin Chisanga: Why Zambia’s election is a major economic event.

Zambia’s $1.7 billion IMF programme ended in January. With the fiscal deficit projected to narrow and unresolved creditor disputes still on the table, a new arrangement is the test investors are watching for after 13 August.

A Programme That Already Ended

Zambia’s $1.7 billion IMF programme, the one that underpinned its sovereign debt restructuring after the 2020 default, concluded in January 2026. Investors watching the 13 August election are treating the prospect of a new IMF arrangement as the clearest available test of whether policy continuity survives the vote, according to Reuters reporting on investor sentiment ahead of the poll.

Why a New Deal Matters More Than a Label

An IMF programme is, in practice, a credibility device: it commits government to a fiscal path and gives creditors and investors a reference point for judging whether that path is being kept. The African Development Bank projects Zambia’s fiscal deficit narrowing from 2.7% of GDP in 2026 to 1.9% in 2027, helped by stronger revenue mobilisation and continued fiscal consolidation. That trajectory is the kind of number a new IMF arrangement would formalise and monitor.

The Unresolved Creditor Question

Not every restructuring thread has been tied off. Negotiations continue with Afreximbank and the Trade and Development Bank, both of which are contesting their classification as preferred creditors on loans that were priced commercially, at times at very high rates. How that dispute resolves will shape Zambia’s cost of borrowing well beyond any single IMF review.

Business and Investor Implications

A narrowing deficit, alongside a current account moving further into surplus on stronger copper export earnings, is the fiscal backdrop investors have been pricing into Zambia’s Eurobonds ahead of the vote. A new IMF programme would not change these underlying numbers, but it would anchor expectations about how government finances them, and how quickly.

Key Takeaways

• Zambia’s previous $1.7 billion IMF programme ended in January 2026.
• The African Development Bank projects the fiscal deficit narrowing from 2.7% of GDP in 2026 to 1.9% in 2027.
• Afreximbank and the Trade and Development Bank’s preferred-creditor status remains contested and unresolved.
• Investors are treating a new IMF arrangement as the clearest signal of post-election policy continuity.

Related reading: Zambia Domestic Financing 2026: Treasury Targets 82% of National Budget and Zambia’s Markets Before the Vote: What LuSE and the Eurobond Show

Related: Opinion – What a Second Hichilema Term Would Mean for Zambia’s Economy

See also: What Investors Are Watching as Zambia Heads to the Polls.

Related analysis: Zambia’s External Debt Dependence Is Shifting to Domestic Capital Formation by Kelvin Chisanga.