Five years after defaulting on its sovereign debt, Zambia has recorded an average annual economic growth of 5.2 percent. This strong recovery is anchored on fiscal consolidation, a completed debt restructuring process, and a sustained International Monetary Fund (IMF) programme. The Zambian government believes these efforts have repositioned the country among the region's faster-growing economies.
This rebound follows a severe economic crisis where public spending reached 37 percent of Gross Domestic Product (GDP) by 2021. Poorly targeted infrastructure projects and weak subsidy management fuelled this increase. Revenue collection also suffered, with domestic revenue as a share of GDP falling from 20.3 percent in 2013 to 18.3 percent in 2017. Exogenous shocks, such as a major drought and the COVID-19 pandemic, worsened the situation, leading to a default on external debt service in 2020.
Ghana, like many other African nations, is closely watching Zambia's recovery as it navigates its own economic challenges. Ghana also experienced a sovereign debt default and is undergoing an IMF programme and debt restructuring. Understanding Zambia's success pillars—fiscal discipline, revenue mobilisation, and targeted social spending—offers valuable lessons for Ghana's economic policymakers. Both countries aim to reduce public debt and stimulate sustainable growth.
Felix Nkulukusa, Secretary to the Treasury at Zambia's Ministry of Finance and National Planning, presented data highlighting this turnaround in February 2026. He outlined the targets the government has set for the coming year. This assessment provides a detailed account of the data behind Zambia's economic resurgence.
The successful implementation of these reforms suggests a positive outlook for Zambia. Decision-makers and financial markets will monitor the long-term sustainability of the fiscal improvements and continued economic growth. The ability to maintain fiscal discipline and attract foreign investment will be crucial for sustained recovery. Other African countries grappling with high debt levels will also study Zambia's experience for potential policy adoption.
Zambia's public debt had surged to 124 percent of GDP in 2020, peaking at 129 percent in 2021. The Hichilema administration, taking office in August 2021, quickly moved to reshape the policy environment. This reset focused on four key objectives: restoring debt sustainability, rebuilding fiscal stability, expanding social spending, and strengthening governance. The government pursued fiscal consolidation by rationalising public expenditure and improving domestic revenue mobilisation.
Key reforms included removing wasteful subsidies, such as fuel subsidies, and replacing them with better-targeted social programmes. The government also committed to investment plans for major mining assets and addressed power sector constraints. Agriculture policy saw an overhaul with a full migration to an e-voucher system, improving beneficiary verification. Socially, free education, a school feeding programme, and a cash-for-work scheme were introduced, without compromising fiscal consolidation.
Institutional changes reinforced this framework, including a Public Debt Management Act and a debt management office aligned with global best practices. Debt restructuring negotiations proceeded under the G20 Common Framework for Debt Treatment. These comprehensive reforms led to significant improvements in economic indicators. GDP growth averaged 5.2 percent annually after 2021, compared to 2.1 percent in the preceding seven years.
The economy expanded 6.2 percent in 2021 and maintained growth above 5 percent in 2022 and 2023. Although growth moderated to 3.8 percent in 2024 due to a drought, it is estimated to have recovered to 5.2 percent in 2025. The budget deficit, which was 9 percent of GDP in 2021, is projected to close below 5 percent in 2025. Public spending decreased from 37 percent of GDP in 2020 to 28.5 percent by 2025. Domestic revenues now cover 81 percent of the budget, up from 59 percent in 2021, with their share of GDP rising from 21.0 percent in 2022 to 22.2 percent in 2025.