Global credit ratings agency Moody’s Ratings projects that Zambia will record one of the largest reductions in government debt in sub-Saharan Africa. President Hakainde Hichilema welcomed the forecast and pledged to turn the recovery into jobs and higher incomes for ordinary citizens.
Moody’s expects Zambia and Ethiopia to post the region’s biggest declines in government debt, and Botswana and Gabon the sharpest increases. The agency also placed Zambia among eight sub-Saharan African countries with a positive outlook.
The forecast is a sharp reversal from 2020, when Zambia became the first African country to default on its sovereign debt during the COVID-19 pandemic. The Head of State dedicated the achievement to Zambians in a statement issued by State House Chief Communications Specialist Mr Clayson Hamasaka.
“In 2020, Zambia was in default. Today, one of the world’s leading ratings agencies says our debt is set to fall further than almost anywhere else in the region,” Mr Hichilema said. “That is the result of hard choices, taken together, and of the patience and sacrifice of the Zambian people. This achievement belongs to them.”
The recovery was not a smooth one. The New Dawn administration inherited the debt crisis when it took office in 2021, and the President’s first term also included a devastating El Niño-induced drought that hit both agricultural production and electricity generation.
The Government responded with a series of fiscal and economic measures. The main one was an external debt restructuring aimed at reducing repayment obligations and easing pressure on public finances. It cut annual debt repayments from US$2.3 billion to US$900 million, generating savings of about US$1.4 billion and creating fiscal space for recovery.
The President linked the falling debt directly to his economic programme. “Every Kwacha freed from debt is a Kwacha we can put to work for Zambians,” he said. “That is the purpose of the Grow Zambia Agenda: to turn stability into jobs, investment and rising incomes in every province.”
He did not declare victory, however. “We are not complacent. The cost of servicing our debt remains too high, and that is why we will hold firmly to fiscal discipline under the new programme. We have restored stability. Now we are delivering growth,” Mr Hichilema said.
The new programme he referred to is a 36-month, US$1.472 billion Extended Credit Facility. Zambia reached a staff-level agreement on it with the International Monetary Fund on October 9, after the Moody’s outlook was published. It succeeds the US$1.7 billion programme that ended in January and is expected to support the country’s transition from stabilisation to growth.
Under the agreement, funds will be released in seven instalments, with the first amounting to about 15 per cent of the total. The proposed programme also seeks to raise the primary fiscal surplus gradually to three per cent of gross domestic product by 2029, starting in 2027. The measures include improved tax administration, stronger compliance and a review of tax exemptions.
Economists welcomed the deal. Economics Association of Zambia national secretary Dr John Musantu said the facility would support macroeconomic stability and help Zambia manage external shocks, including geopolitical conflicts affecting the global oil market and unfavourable weather patterns.
Dr Musantu said domestic financing alone could not fund the country’s development agenda, so concessional loans with favourable terms should be prioritised. He welcomed the IMF facility because it came at zero interest. Once finalised, he said, it would also reduce the Government’s borrowing on the domestic credit market as it meets its spending obligations.
Manufacturers have pointed to the wider economic picture. Zambia Association of Manufacturers president Mr Mohammed Umar said inflation had fallen from more than 24 per cent in 2021 to 6.1 per cent in September 2026. He added that the Kwacha had remained stable, foreign exchange reserves had reached record highs and growth had rebounded to 5.2 per cent in the second quarter.
Economist Mr Andrew Chibuye said the improvement still has limits. Stronger economic activity does not automatically produce stronger public finances, he said, citing weaker-than-expected revenue collections and higher-than-budgeted spending by the Food Reserve Agency.
Households, Mr Chibuye added, are still waiting to feel the benefits. Lower inflation does not necessarily mean prices have fallen, he said, and many families continue to face high costs for food, transport and education.
The President said the Government would continue working with the IMF, cooperating partners and investors to ensure the gains of recent years reach the daily lives of Zambians.
Finance and National Planning Minister Dr Situmbeko Musokotwane is now leading Zambia’s delegation at the IMF and World Bank annual meetings in Bangkok, Thailand, which run until October 18. Talks with the IMF there will focus on advancing the successor programme, including the agreed reforms and prior actions required for consideration by IMF management and approval by its executive board.
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