By Amb. Emmanuel Mwamba
Zambia’s Debt; From $14.7billion in 2021 to $21.6 billion in December 2024
● Includes new IMF Loan of $1.8billion
● $750m from World Bank Group
● $750million fuel debt
Zambia: Fourth Review Under the Arrangement Under the Extended Credit Facility and Financing Assurances Review—Debt Sustainability Analysis
Zambia’s external public and publicly guaranteed (PPG) debt increased to
US$21.6 billion by end-2023.
This reflected close to US$710 million in new foreign-currency
denominated external debt disbursements to the central government – principally from the IMF and
World Bank-and an increase in interest arrears on central government foreign currency-
denominated external debt of about US$439 million in 2023.
Expenditure arrears (fuel and
contractors) owed to non-resident suppliers, together with ZESCO’s arrears to external IPPs, were
broadly unchanged at US$1.75 billion at end-2023. While further interest arrears of US$90 million
accumulated on government guaranteed external debt, ZESCO’s non-guaranteed external debt was
fully amortized in 2023 as it generated sufficient revenues to continue servicing it.
As a result,
external PPG debt ended the year about US$639 million higher (see Text Table 2). However, NR
holdings of domestic-currency debt declined in dollar terms to US$2.2 billion by end-2023 due to
the exchange rate depreciation.
Zambia’s public debt is assessed as sustainable but remains at high risk of overall and external
debt distress, compared to the June 2024 assessment indicating Zambia’s external and overall
public debt as in debt distress, with unsustainable public debt.
The analysis is based on a full
post-restructuring macro-framework, incorporating the treatment of official bilateral claims
agreed with Zambia’s Official Creditor Committee (OCC), the completed Eurobond exchange,
the agreements in principle (AIP) reached with some of the external commercial creditors, and
under the assumption of treatment of the residual claims of other external commercial
creditors in line with the authorities’ restructuring strategy and consistent with program
parameters and comparability of treatment principles.
Under the baseline, there are remaining
breaches of the overall and some external debt indicator thresholds.
Zambia’s debt indicators
are projected to improve, consistent with a moderate risk of external debt distress in the
medium term.
The present value of external debt-to-exports ratio is expected to decline below
the 84 percent threshold indicating “substantial space to absorb shocks” by 2027 and the debt
service-to-revenue ratio is projected to fall below the 14 percent threshold by 2025 and remain
below this level on average over 2026–31.
The DSA suggests that shocks to export and
combined shocks of the economy would present downside risks to the debt outlookThe Debt Sustainability Analysis (DSA) was prepared jointly by the staff of the International Monetary Fund and the International Development Association, in consultation with the authorities.
Note; Public Debt Coverage
1. As in the previous DSA, the coverage of Zambia’s public and publicly guaranteed (PPG) debt for the purpose of the DSA includes the following :
i) central government domestic and external debt, including arrears to external suppliers (fuel and contractors) and central government guaranteed external debt;
ii) the non-guaranteed external debt of Zambia Electricity Supply Company (ZESCO), the fiscally important state-owned utility;2 and
iii) the domestic and external arrears of the same enterprise.
Central bank external debt (including outstanding Fund credit), together with the debt of social security funds guaranteed by the central government,are also included in the coverage.