img images ZAMBIA

Zambia’s public debt to GDP ratio significantly increased during the 1970s, reaching over 100% of GDP in 1980. The ratio rose further to an average of 182% of GDP per year by the early 2000s. This was mainly due to the decrease in the price of copper – which was the major export earning of Zambia, and the rising interest rate on existing debts – rather than any new debts. First, in early 1970s, copper and processing of the metal accounted for more than 90% of Zambia’s foreign exchange earnings. The decline in the world copper prices and in Zambian copper output due to the flooding substantially decreased government revenues, which meant Zambia had to borrow money to keep the country running. Second, due to the second oil price shock in 1979, interest rates on Zambia’s loans taken in the 1970s for infrastructure and investment began to rise, making it difficult for Zambia to pay back the loans. The accumulation of arrears then significantly increased its debt level.


Economic Growth

4.5 / 8

DR's Debt Transparency Index


Gross Debt Position % Of GDP


Budget balance 2021


Debt to GDP Ratio

Zambia’s public debt to GDP ratio decreased significantly from 183.5% of GDP in 2003 to only 19.3% of GDP in 2004. It was the debt relief from the Heavily Indebted Poor Countries (HIPC) Initiative which contributed to the sharp decrease of Zambia’s debt level. Zambia completed the HIPC in 2005 along with significant support through the Multilateral Debt Relief Initiative, and also debt cancellation from China, which eased its debt burden.

During the period of 2004 and 2015, the Debt to GDP ratio then remained low, with only around 22.4% of GDP per year. This period of time also witnessed the economic development of Zambia. Its GDP growth between 2000-2014 averaged roughly 6.8% per year.

The economy of Zambia then slowed again to 3.1% per year between 2015 and 2019, due to falling copper prices, declines in agricultural output, and droughts. At the same time, its public debt level increased again to 59% of GDP in 2018. One major reason was that Zambia graduated from being a lower middle-income country in 2011, which limited its access to concessional loans. Therefore, Zambia began to borrow money in the Eurobond market at commercial rates, meaning higher interest and shorter time frames – and therefore overall higher debt repayments.

In 2017, the Ministry of Finance of Zambia introduced a Medium-Term Debt Strategy 2017-2019 to manage the risk exposure in Zambia’s public debt portfolio and guide decision making for the country. The Strategy aimed to restructure the Debt Office to increase debt management capacity and to ensure debt data credibility. The Strategy also intended to follow the IMF-advocated thresholds/ratios to further ensure debt sustainability over the medium to long term.

As a result, Zambia scores in the mid-range of the Debt Transparency Index, with the government providing incomplete debt stocks data or economic reports as well as only drafting the Freedom of Information rules.


Revenue and Budget Balance

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Zambia currently has 25% of all its external loans owed to China, the same percentage as owed to the private sector (via “Eurobonds”). This makes China Zambia’s largest official bilateral creditor. In 2019, Chinese debt payments accounted for 29% of Zambia’s total debt payment, compared to private sector payments of 25%.  According to the China Africa Research Initiative, China provided at least 69 loans – one of the highest numbers among the 20 countries examined in this guide – to Zambia from 2000-2018, totalling almost US$9.7 billion at end-2018. The loans were mainly used in developing transport and power infrastructure. In addition, the amount of loans from China has increased since 2000. Based on the calculation of data from CARI, in 2009, Chinese loans amounted at US$170 million in 2009, but Zambia borrowed US$2.2 billion in 2017 from China.

China cancelled Zambia’s debt in 2001, 2006, and 2007, with the amount of US$40 million, US$211 million and US$8 million, respectively. For comparison, Zambia received US$2 billion in committed debt relief through the HIPC initiative.

China Debt : GDP Ratio (%)

External Debt Stock to China vs. Other Countries (USD millions)

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Zambia’s forecast public debt is expected to reach 90% of its GDP in 2020. Zambia needs significant infrastructure finance to meet outstanding basic needs of the population and to cut poverty. Access to water, electricity and internet are particularly behind, and road infrastructure is currently very limited.

Despite these financing needs, the country is identified at a high risk of debt distress by the IMF and the Jubilee debt campaign predicts a debt crisis in the country in 2020, with high debt payments alongside low capacity to mobilize domestic resources due to COVID19 (see below). In terms of creditworthiness, Fitch downgraded Zambia’s credit rating on its foreign currency to  ‘RD’ on November 18th 2020, which means “restricted default” and indicates that in Fitch’s opinion, Zambia has experienced a payment default or distressed debt exchange on its financial obligation.  Zambia’s credit rating is nevertheless still the fifth strongest amongst the countries analysed in this guide.

External Debt

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WRITERS   Joe Peissel and Yike Fu   GRAPHIC DESIGNER  Kayode Animashaun
and The Development Reimagined Team

Statement on use of data:

This debt guide uses a compilation of data from the IMF World Economic Outlook, the World Bank, the AfDB, Trading Economics, Jubilee Debt Campaign, China Africa Research Initiative for Chinese loans, Christoph Trebesch et al. for China Debt Stock Database, DR’s dataset for debt cancellation and COVID spending, as well as the data from countries’ government websites (if applicable).


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