ZAMBIA’S ECONOMIC FORTUNES IMPROVE AS RESERVES RISE, KWACHA STRENGTHENS, AND BOND MARKET REBOUNDS
…..Gross international reserves increased to US$4.5 billion equivalent to 4.6 months of import cover at end March 2025
Lusaka… August 5, 2025 (SMART EAGLES)
The Ministry of Finance has disclosed that the Gross international reserves increased to US$4.5 billion (equivalent to 4.6 months of import cover) at end March 2025 from US$4.3 billion at end – December 2024.
Secretary to the Treasury Felix Nkulukusa says this was mostly due to net Bank of Zambia forex purchases from the mines, non-tax foreign exchange revenue and project receipts largely underpinned the rise in the reserves.
Meanwhile, Mr Nkulukusa disclosed that after depreciating 8% in 2022, 30% in 2023 and 8% last year, the kwacha is stronger by 19% against the dollar in 2025.
He said this during the Town Hall Forum on the First Half of 2025 Budget Performance and Economic Developments meeting in Lusaka today.
He also said after restructuring Zambia’s bonds in July 2024, they have become a top performer in some of the riskiest parts of the global debt market.
He said bond holders of Zambian bonds are now reaping a bonanza.
“For example, as at 20th June 2025, a US$100 million investment in a Zambian bond had swelled to US$121 million in less than a year as lenders to emerging markets and high-yield borrowers in general turned the same amount into much less, US$109 million and US$112 million, respectively,” he said.
“Zambia has made significant progress with its debt restructuring, having achieved over 92% Agreement In Principal with its creditors amounting to US$12.4 billion. Of this amount, US$4.01 billion was restructured in 2024,US$2.70 billion in 2025. The balance of US$5.7 billion is yet to be concluded. We continue to engage with the remaining 7.8%,of whom are private creditors, not yet agreed in Principle, in good faith.”
Mr Nkulukusa further said the debt service to revenue ratio is currently calculated at 24.2 % in 2025 and not 14% which is the target, mainly on account of PDI accrued in 2023 and 2024, as well as the fuel liability management operation.
“Accordingly, to resolve the breach, we would need about $3,054 million (about K84 billion) in new revenue measures to meet the DSA programme parameters. Discounting one offs (PDIs and fuel arears payments) leaves us with a debt service to revenue ratio at 15%. (US $943.7 million debt service vs a total of US $6.29 billion revenues), implying a breach of about 1% which requires revenue efforts of about $450 million (about K12.6 billion) in additional revenues to meet the 14 percent threshold (US $943.7 million Vs US $6.74 billion). We thus need more revenue effort in 2025 and the medium term,” he added.
“The developments in the first half of 2025 reflect both Zambia’s resilience and the impact of the reforms that the New Dawn Government has continued to implement under the 8NDP. The developments have also shown that Government’s commitments under the economic reform programme have started bearing fruits.
However, as Government, we are cognizant of challenges that we must operate under, such as increasingly uncertain global economic environment, and improving our livelihoods. Even with global uncertainty, we remain confident that through implementation of sound policy, prudent fiscal management, and close collaboration with our stakeholders, we will build a stronger and more inclusive economy.”
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