TUESDAY, JANUARY 13, 2026
LUSAKA - Zambia’s recent debt crisis compelled the country to undertake far-reaching debt management and economic reforms, supported by a 38-month Extended Credit Facility (ECF) from the International Monetary Fund (IMF). While these reforms have been central to restoring fiscal stability and addressing debt distress, their implications for ordinary citizens, businesses, and social development have remained a subject of intense public debate.
This new report, Assessing the Social and Economic Implications of Zambia’s Debt Management Reforms, provides a comprehensive analysis of how these reforms are reshaping Zambia’s economic landscape and affecting social outcomes across the country .
Zambia entered the IMF-supported programme against a backdrop of unsustainable debt levels, shrinking fiscal space, and growing pressure on public services. The reforms were designed to stabilise the economy, restructure debt, and improve public financial management. However, international experience shows that such reforms often come with difficult trade-offs, particularly for vulnerable populations.
This study responds to a critical question: Are Zambia’s debt management reforms delivering fiscal stability without undermining social equity and inclusive development?
The report finds that Zambia has succeeded in slowing the pace of external debt accumulation, with growth in external debt declining significantly over recent years. Through the suspension of non-concessional borrowing and the cancellation or rescoping of non-priority projects, the government has created additional fiscal space and improved debt oversight through the enactment of the Public Debt Management Act.
At the same time, the stock of external debt has continued to rise, largely due to ongoing disbursements for priority infrastructure projects. The shift towards increased domestic borrowing has also raised concerns about the crowding out of private sector credit, potentially constraining business growth and employment creation.
On the social front, the findings are mixed. Increased fiscal space has allowed government to scale up spending on education, health, and social protection programmes such as the Social Cash Transfer, free education, and school feeding initiatives. These investments are critical for long-term poverty reduction and human development.
However, austerity measures — including the removal of fuel subsidies, cost-reflective electricity tariffs, and new indirect taxes — have contributed to a rising cost of living. The burden has fallen most heavily on low-income households, women, and those in informal or rural livelihoods, exacerbating existing inequalities and economic vulnerability.
The report underscores that while debt management reforms are essential for macroeconomic stability, they must be carefully designed and implemented to avoid deepening poverty and social exclusion. Sustaining fiscal discipline without adequate social protection risks undermining public confidence and long-term development outcomes.
The study therefore calls for a more balanced approach — one that combines prudent debt management with targeted social spending, stronger oversight, and inclusive economic policies that protect vulnerable groups while supporting private sector-led growth.
The full report provides detailed analysis, data, and recommendations aimed at policymakers, civil society, researchers, and the general public. It offers evidence-based insights to inform Zambia’s ongoing debt restructuring process and broader development agenda.
Access the full report using the buttons provided above or below this page.
"A just Zambian society guided by faith, where everyone enjoys the fullness of life".