TABLE OF CONTENTS

EXECUTIVE SUMMARY .......................................................................................... 2

MOTIVATION OF THE AUDIT .................................................................................. 3

OBJECTIVES OF DEBT AUDITING BY CSO .......................................................... 3

SITUATION ANALYSIS OF ZAMBIA'S DEBT POSITION ....................................... 4

GUARANTEED AND NON-GUARANTEED SOE EXTERNAL DEBT ..................... 5

EXTERNAL DEBT ARREARS ................................................................................. 5

DOMESTIC DEBT..................................................................................................... 8

DEBT AND DOMESTIC REVENUE.......................................................................... 9

MAJOR DEBT DRIVERS AND DEBT IMPACTS ..................................................... 9

CURRENT BUDGETARY NEEDS .......................................................................... 10

IMPLICATIONS OF GROWING DEBT ON SOCIAL SECTOR SPENDING AS

OBSERVED BY THE MOVEMENT ........................................................................ 10

THE IMF EXTENTED CREDIT FACILITY AND ITS IMPLICATIONS..................... 11

DEBT RESTRUCTURING AND TOWARDS DEBT MANAGEMENT..................... 12

DEBT TRANSPARENCY AND ACCOUNTABILITY .............................................. 13

ZAMBIA CSO DEMANDS AND RECOMMENDATIONS ....................................... 14

CONCLUSION ........................................................................................................ 17

REFERENCE .......................................................................................................... 18

Debt Position Analysis of Zambia 1

EXECUTIVE SUMMARY

The Citizen Action for Debt Justice Project is a collective effort by the Regional Debt
Movement in Southern Africa which is coordinated by the Southern African Solidarity
Network (SAPSN) whose aim is to stimulate and strength citizen-led actions to
address the ongoing sovereign debt crises urgently affecting millions of people in
Malawi, Mozambique, Zambia and Zimbabwe. Through this Project, an empowered
and well-coordinated regional debt movement will work in close collaboration with pan-
African and global allies to mobilise citizen voices and exert coordinated political
pressure on bilateral, multilateral and private creditors, to take concrete steps to:
cancel debt payments; reform debt resolution mechanisms; reduce debts to
sustainable levels and reign in responsible lending. This paper is therefore one of its
publications around its work on debt issues with Zambia as a case.

The management of public debt is an important framework used to improve economic

growth and development of a country for both current and future generations. Many
poor countries in Africa including Zambia in the 1970s and 1980s secured loans to
invest in their economy to propel growth but not much was realised for one reason or
the other. The public debt definition used in this paper is as defined by the World Bank
and therefore covers the central government direct and guaranteed debt (including
budget expenditure arrears), as well as the nonguaranteed external debt of a fiscally
important state-owned enterprise (SOE).

Goal 17 of the Sustainable Development Goals (SDGs) encourages partnership

among nations and institutions to assist developing countries in attaining long-term
debt sustainability through coordinated policies aimed at fostering debt financing, debt
relief, and debt restructuring, as appropriate and addressing the external debt of highly
indebted poor countries to reduce debt distress.

The Ministry of Finance and National Planning (MOFNP) in Zambia is charged with
the responsibility to manage public debt and to ensure that debts are maintained at a
sustainable threshold. Even though the government of the republic of Zambia aims to
maintain public debt at a sustainable threshold of not more than 60% of GDP, the
levels of public debt, the total public debt stock of Zambia as at the end of December
2021 was estimated to be around $27 billion, of which external and domestic debts

Debt Position Analysis of Zambia 2

accounted for $13billion and 14billion, respectively. This accounted for over 100% debt
to GDP ratio and thus raised serious concerns.

MOTIVATION OF THE AUDIT

Total public debt was projected at over 60% of GDP in 2020 largely reflecting the larger
fiscal deficit. As of the Debt Sustainability Analysis (DSA) in 2019, both external and
overall risk of debt distress remained “high”. Zambia in November 2020 became
the first African state to default on a $42 million interest payment for Eurobonds during
the Covid-19. Pandemic.

In August 2022, the Zambian government and the IMF announced a 38-month, $1.3
billion arrangement under the Extended Credit Facility. This deal was made possible
after a creditor committee chaired by France and China – the country’s top two
creditors – resolved to negotiate a debt restructuring agreement and currently
negotiating to seal a deal of restructuring its over $13billion external debt via the Group
20 common framework. Zambia’s current residual financing gap was pegged at $2.6
billion and the IMF Extended Credit Facility of $1.3 billion only provided $50%.

OBJECTIVES OF DEBT AUDITING BY CSO

Debt distress implications on the ordinary citizens are that the government is
incapacitated and scales back on its social spending budget as it directs revenue
towards servicing debt and arrears. Borrowing further forces government to take
austerity measures. Consequently, the ordinary citizen and the poor are saddled by
debt distress through poor public service delivery. Women in urban and rural areas
are the worst affected by poor service delivery as they spend more time performing
unpaid care work in households when they can be contributing on decision making
platforms. High levels of public indebtedness also have repercussions on the citizenry
who are burdened by high levels of unemployment, inequality and poverty.

Therefore it becomes imperative for various stakeholders such as the Civil Society
Organisations to hold Governments accountable for public debt and assess progress
being made to ensure debt sustainability. A key objective of auditing public debt is to
assess whether governance of public debt is within the interest of the citizens and debt
reports meet the requirements and standards established in domestic legislation as

Debt Position Analysis of Zambia 3

well as international practices. Audit procedures designs are to determine whether the
government;

• regularly publishes information on the stock and composition of its debt, including
currency, maturity, residency classification and interest rate structure, as well as
the costs of servicing its debt.
• whether data on debt stocks and flows are disseminated in a manner consistent
with national and international reporting

Financial audit of debt reporting could be undertaken with the following objectives:

• To determine whether public debt information is presented completely and

accurately
• To determine whether public debt information has been accurately and adequately
disclosed in a fair manner, in accordance with prevailing standards.

According to the UNCTAD Principle 11 on disclosure and publication, relevant terms

and conditions of a financing agreement should be;

(a) disclosed by the sovereign borrower,

(b) be universally available
(c) be freely accessible in a timely manner through online means to all stakeholders,
including citizens.

SITUATION ANALYSIS OF ZAMBIA’S DEBT POSITION

According to the International Monetary Fund (IMF), a country’s public debt is

considered sustainable if the government is able to meet all its current and future
payment obligations without exceptional financial assistance or going into default. To
ascertain sustainability, the debt to GDP ratio should be within a certain threshold. The
debt to GDP (value of products and services produced within a given time period) ratio
is basically the percentage of debt to the total value of goods and services produced
within a given time period. In this regard, for Zambia’s debt to be considered
sustainable, the debt to GDP ratio should be below 60%, according to the IMF and
World Bank thresholds.

According to the Ministry of Finance and National Planning, Zambia’s total public
sector debt as at end quarter four of 2021 was USD27,132.33 million, out of which

Debt Position Analysis of Zambia 4

Central Government external debt was USD13,959.59 million, while Guaranteed and
Non-Guaranteed SOEs’ external loans amounted to USD1,454.37 million and
USD91.04 million respectively. Domestic debt amounted to ZMW210, 004.15 million
equivalent to USD11, 627.33 million.

It is projected that without taking any consideration of the debt restructuring, Public
sector external debt service for Zambia over the next 10 years would amount to
USD12, 430.16 million and that this consists of USD10, 973.32 million for Central
Government and USD1, 831.40 million for SOEs.

The Ministry of Finance and National Planning (MOFNP) in Zambia further reports that
Central Government external debt stock increased by 4.47 percent to USD13,959.59
million as at end quarter 2022 from USD13,362.83 million as at end quarter three of
2022. This was attributed to new disbursements from multilateral creditors, which
accounted for the largest increase in the debt stock. The projections do not take into
account any adjustments arising from the anticipated debt restructuring exercise under
the Common Framework.

GUARANTEED AND NON-GUARANTEED SOE EXTERNAL DEBT

The Ministry of Finance further reports that in the quarter one, the stock of government
guaranteed (SOE) external debt reduced by 1.39 percent, to USD1, 434.12 million
from USD1, 454.37 million at end quarter four of 2022. The reduction is mainly
attributed to principal repayments amounting to USD18.13 million.

The stock of Non-guaranteed (SOE) external debt reduced by 90.62 percent to

USD8.54 million at end quarter one of 2023, from USD91.04 million at end quarter four
of 2022. The reduction is due to debt service payments amounting to USD82.49
million, out of which US$ 80.31 million is an early settlement to China Export Import
Bank.

EXTERNAL DEBT ARREARS

The Ministry of Finance and National Planning reported that external debt service
arrears as at end quarter one 2023 increased by 9.74 percent to USD 4,459.6 million
from the USD 4,063.96 million recorded at end quarter four 2022. Principal arrears as
at end quarter one 2023 had accrued to USD 3,255.0 million while interest arrears

Debt Position Analysis of Zambia 5

accrued to USD 1,204.6 million The increase in the external debt arrears between the
two quarters was driven by the on-going debt service standstill on non-multilateral debt

A five-year historical analysis of public and publicly guaranteed debt shows a steady
increase from US$ 13.12 billion (50.9 percent of GDP) as at end 2017 to about US$
27 billion (125.3 percent of GDP) as at end 2021 (refer to gragh 1 below which shows
debt trend from 2010 to 2021). The increase over the period was mainly attributed to
a rise in financing needs which led to higher borrowing to finance projects primarily in
the energy and infrastructure sectors.

Debt
14
12
10
Axis Title

8
6
4
2
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Debt 1.98 3.18 3.51 4.79 6.7 6.95 8.74 10.05 11.48 12.7 12.9

The Zambian Ministry of Finance and National Planning (MOFNP) further reports that
the stock of domestic debt (Government securities) grew by 5.3 percent to K203.28
billion as at end June 2022 from K192.23 billion as at end December 2021. They
attribute this growing debt to the financing needs for the Budget.

Government bonds increased by 4.7 percent to K165.47 billion from K158.08 billion
while the stock of Treasury Bills rose by 8.3 percent to K37.80 billion from K34.91
billion as at end December 2021. Of the total stock of domestic debt, Government
bonds and Treasury Bills accounted for 81.4 percent and 18.6 percent, respectively.
As at end June 2022, bilateral debt accounted for the largest proportion at 29.5 percent
while debt owed to Eurobond had 22.6%. Plurilateral creditors had a 6.2 percent share
of the debt. Commercial and multilateral creditors accounted for 23.0 and 19.7
respectively percent

Debt Position Analysis of Zambia 6

Debt Position Analysis of Zambia 7
DOMESTIC DEBT AS JUNE 2022

Bonds Treasury Bills

Treasury Bills
19%

Bonds
81%

EXTERNAL DEBT AS AT JUNE 2021

6.2

29
19.7
Bilateral
Commercial
Eurobond
Multilateral
Plurilateral

22.6
23

Debt Position Analysis of Zambia 8

5 year review below of the period 2016- 2022 shows an upward trend in Zambia’s total
public debt.

Total Public Debt (million USD)

2022 27,132.33

2021 26,293.14

2020 20,467.89

2019 18,946.38

2018 16,241.35

2017 14,271.98

2016 11,037.59

0.00 5,000.00 10,000.00 15,000.00 20,000.00 25,000.00 30,000.00

Key contributing factors include extensive borrowing for infrastructure projects, weak
controls and limited parliamentary oversight during debt contraction.

DOMESTIC DEBT

By December 2022, the total debt stock continued to rise with domestic debt rising to
around K240 billion from k200billion June 2022, accounting for over 40% of Zambia’s
stock of debt. As at end-December 2022, Zambia’s total public debt was USD
equivalent 31.6bn excluding interest arrears, and USD equiv. 32.8bn including interest
arrears. The end-December 2022 external stock, excluding interest arrears, of Central
Government debt, guaranteed SOEs loans and non-guaranteed SOEs loans,
amounted to USD 14bn, USD 1.5bn and USD 91million respectively.

Debt Position Analysis of Zambia 9

DEBT AND DOMESTIC REVENUE

The graph below indicates how debt service allocation has been growing since 2010
to 2021 relative to revenue growth. You will notice that the gap has been widening
indicating growth in the fiscal gap over the years which resulted in the current fiscal
distress the country is in.

120,000
100,000
80,000
60,000
40,000
20,000
0

Domestic Revenue Debt Service

MAJOR DEBT DRIVERS AND DEBT IMPACTS

The growing debt stock of Zambia is closely linked to the country’s transition from a
low-income to a lower middle-income country in 2011 as its borrowing options opened
up and the country was able to participate in commercial debt markets. In 2012, 2014
and 2015, the country borrowed US$750 million, US$1.0 billion and US$1.25 billion,
respectively, rapidly raking up a total (commercial) Eurobond debt of US$3.0 billion in
less than 5 years. Other commercial loans obtained from commercial banks and other
financial institutions such as the China Commercial Bank also came online. As the
proportion of commercial debt in the total debt profile grew, so too did the debt service
costs the country faced. The rise in public debt has had adverse effects on inflation,
exchange rates and ultimately growth, as well as reducing fiscal space for critical
social spending. Further, the economy had been characterised by high fiscal deficits
due to the expansionary fiscal path that had been maintained with resources mainly

Debt Position Analysis of Zambia 10

channelled to infrastructure projects. As a result of the widening and perpetual fiscal
deficit, the authorities have had to borrow more to finance the deficit. In order to
reverse the adverse effects of the debt, the Government has instituted a number of
key public financial management reforms over the last few years.

CURRENT BUDGETARY NEEDS

 Zambia’s Balance of Payments (BOP) financing needs are estimated at $11 billion
over 2022-25.

 Debt relief from the debt restructuring amounting to $8.4 billion is required to
achieve debt sustainability

 Zambia has a residual financing gap of $2.6 billion.

 The IMF’s ECF pegged at $1.3 billion is allocated as follows; (50% ➔ Budget
Support; 50% ➔ BoZ reserves); Covers 51% of $2.6 billion.

 Other development partners (principally the World Bank); Covers 49% of $2.6
billion.

 Government seeks to increase social spending to 1.6% of GDP by 2025 (slightly

more than double the size in 2020 of 0.7 percent of GDP)

IMPLICATIONS OF GROWING DEBT ON SOCIAL SECTOR

SPENDING AS OBSERVED BY THE MOVEMENT

According to a publication by the Southern African Institute for Policy and Research,
(SAIPAR), the growing debt service burden culminated into crowding out of social
sector spending. The paper argued that social spending had already collapsed well
before COVID19. For the year 2017, the allocation to debt service in the National
Budget was 14% of the budget. During execution of the 2017 Budget, 109% of the
debt service budgetary allocation was funded, implying a 9-percentage point
overspend on debt service. On the other hand, selected social spending areas
(Pensions Fund, Social Cash Transfer (SCT), Water and Sanitation, Economic
Empowerment and Rural Electrification spending combined) were allocated 5.03% of
the 2017 Budget, but received far less their allocation, at 64% of the combined

Debt Position Analysis of Zambia 11

allocation. This implied a 36-percentage points underspending on the budget.
Furthermore, Water and Sanitation only received a paltry 8% of its targeted allocation
in 2017.

THE IMF EXTENTED CREDIT FACILITY AND ITS IMPLCATIONS

As part of the long term solution to Zambia’s debt situation, the Government of the
Republic of Zambia is addressing the current debt crisis under the G20 and Common
Framework. To help with the Zambia debt problem, Zambia has been supported with
$ 1.3 Billion by IMF as Extended Credit Facility (ECF) for 38 Months and this Fund
aims to restore macroeconomic stability and foster higher, more resilient, and inclusive
growth by addressing Zambia’s most pressing macroeconomic challenges namely:

• Restoring Sustainability through fiscal adjustment and Debt restructuring.

• Creating room in the budget for much – needed social spending.
• Strengthening Governance and reducing the risk of Corruption, including by
improving Public Financial Management.

It is envisaged that in just 38 months during which the IMF EFC support will be
disbursed, Zambia is being pushed to move from a 6% deficit to a 3.2% surplus.
However, some stakeholders argue that this is to be complemented by significant cuts
in some crucial areas of spending and some increases in taxes that may pass the
burden onto the poor majority rather than onto the richest individuals and
companies. In 2021, Actionaid raised serious concerns about the abrupt removal of
fuel and electricity subsidies which they said was leaving Zambian citizens completely
exposed to the wild volatility of fuel prices on the international market following the
Ukraine war. The Action Aid further stressed that whilst many other countries are
exploring the introduction of price controls and subsidies in response to the present
fuel price surges, Zambia will be forced in the opposite direction.
(https://actionaid.org/news/2022/reactions-imf-programme)

However, other supporters of the IMF programme argued that the programme
provides a very strong signal to the international community, unlocking pockets of
finance and international goodwill: A paper done by SAIPER postulated that;

Debt Position Analysis of Zambia 12

(i) The G20 Common Framework of Official Creditors succeeded in establishing a
moratorium, which covered part of Zambia’s official debt for a period. This
moratorium was possible because the IMF and World Bank weighed in and
guided the establishment and implementation of the Common Framework.
(ii) Despite Zambia having hired financial advisors Lazard Frères and legal advisor
White & Case, refinancing talks with Eurobond holder stalled in 2020, with the
Bondholder citing, among other things, the agreement of a Fund deal between
Zambia and the IMF as a pre-condition for negotiating with creditors. In other
words, the Eurobond creditors suspended negotiations on debt restructuring
until Zambia secures an IMF deal
(iii) Multilateral and bilateral partners are on record that their future development
finance to Zambian will depend on both good standing with them individually
and on good standing with the IMF and that this is especially important for
securing budget support from various development partners, something that
will not be granted without an IMF deal.

DEBT RESTRUCTURING AND TOWARDS DEBT MANAGEMENT

The G20 launched the Common Framework after it became apparent that its 2020
Debt Service Suspension Initiative which deferred debt service payments of struggling
countries so they could tackle COVID-19 would not be enough for all countries. The
Common Framework enables more flexible and extensive debt service deferments for
those facing liquidity problems. For countries like Zambia with unsustainable debt, it
also allows for a deeper restructuring of loans to make them more sustainable.

However, while this first step was necessary to avoid a potential collapse of the
economy, it remains uncertain that it is sufficient to guarantee economic stabilization.
This is because for debt distressed countries like Zambia to reduce its debt service-
to-revenue ratio to sustainable levels by 2025, as the IMF demands, the country will
have to implement a series of austerity measures. Thus far, only Chad, Ethiopia, and
Zambia have requested debt relief under the Common Framework in Africa. Zambia
is a heavily subsidized economy. One of the demands of the bailout program is the
reduction of subsidies. A first and crucial test will be the effects of the recent removal
of fuel subsidies. However, other measures may follow, including the removal of
agricultural subsidies.

Debt Position Analysis of Zambia 13

The Common Framework restructuring process has been slow to get under way, with
Zambia currently furthest along. The process for Zambia began with a debt
sustainability analysis (DSA), conducted by the IMF and the World Bank, to assess
the government’s debt servicing needs for the short as well as the long term. The aim
is to identify how much debt relief will be necessary to render the debt servicing burden
feasible. The relief that will ensure debt suitability for Zambia is $8.4 billion. Zambia’s
DSA, for instance, envisions no restructuring of domestic-issued bond debt, even
though some of these instruments are held by foreign investors. Governments,
especially those already facing economic downturns, may question whether a debt
servicing burden that is deemed “sustainable” by technocrats in the West is politically
survivable Zambia. The outcome of Zambia’s debt negotiation and restructuring
process will not only affect the strategies of countries in similar situations, like Ghana,
Nigeria, or Angola, but also lending policies in general and the way creditors deal with
default situation.

DEBT TRANSPARENCY AND ACCOUNTABILITY

Sovereign debtors have a responsibility to disclose complete and accurate information

on their economic and financial situation that conforms to standardised reporting
requirements and is relevant to their debt situation. Governments are therefore
expected to respond openly to requests for related information from relevant parties
including the Civil Society Organisations.

In Zambia, the supreme law of the land, the Constitution provides was amended in
2016 and contains provisions for strengthened public debt management. In addition,
key pieces of primary and secondary legislation were revised. These included the
Public Finance Management Act in 2018, the Planning and Budgeting Act, the Public
Procurement Act in 2020 and recently the Public Debt Management Act No. 15 of 2022
(PDMA) was enacted to repeal the Loans contraction and guarantees Act of 1969
which had a number of loopholes.

The Public Debt Management Act No. of 2022 which repealed the Loans and
Guarantee Act of 1969 provides for the publication of the planned domestic and
external borrowing for the relevant fiscal year in the statement of Government Budget
and Statement. The Public Debt Management Division, in line with best practice and

Debt Position Analysis of Zambia 14

provision of the Act has been established and is expected to manage the effective
implementation of the Annual Borrowing Plan to enhance transparency and
accountability. The Public Debt Management Act provides for:

• Establishment of a DMO and its function

• Raising of loans

• The approval of loans by the National Assembly

• Issuance of loans by or on behalf of the Government

• Establishment of a sinking fund

• Issuing of guarantees

• Raising of grants

The movement noted that there has been improved accountably and transparency
with regards the position of Government debt as the information was readily available
Government’s website. However, for verification sake, there was no independent
published data or statistics on debt. Further, the Movement also observed that the
newly enacted Public Debt Management Act provided for the establishment of a
Sinking Fund to finance payments for debt. This was a progressive move as the earlier
established sinking fund in 2015 was not backed by law hence there was not much
the Civil society could do to ensure Government abide by its commitment to raise
funds for debt servicing. It was observed that there was need for regular update of the
sinking fund every quarter for the country to be aware of how much the Government
was raising towards debt repayment. With the Public Debt Management Act in effect,
there is an annual borrowing plan for 2023 was formulated in line with the 2023
national budget. Publication of the Medium Term Debt Management Strategy is also
mandatory and effect.

ZAMBIA CSO DEMANDS AND RECOMMENDATIONS

The Regional Debt Movement under Southern Africa People’s Solidarity Network
(SAPSN) seeks to become a people centred presence and influence in efforts to
resolve the regional debt crisis. The interests and perspectives of women, youth and
other marginalized citizens’ voices are fully represented in dominant debt discourse

Debt Position Analysis of Zambia 15

and key decision-making platforms. The Regional Debt Movement possesses a
reliable knowledge and evidence base to consistently hold duty bearers accountable
for addressing the regional debt crisis. The Regional Debt Movement has a consistent
and visible presence during national (parliament), regional (SADC process) and global
(civil society spaces around WB/IMF annual meetings, G7/G20) decision making
platforms to press for debt justice. It is the demand of the movement for improved
opacity around debt issues for citizens to fully participate in national affairs especially
around debt and therefore based on the audit from the CSO perspective, makes the
following demands;

1. The Movement demands for improvement in collaboration among regional CSOs

in order to build strong consensus that will compel the Governments in the region
to remains complaint and consistent with the legal provisions that guide
transparency and accountability on debt related matters among others such as
the publishing of quarterly statistical bulletins and also the Medium Term Debt
Strategy papers in order to build confidence among stakeholder and also promote
opacity around debt issues.
2. The SAPSN demands for reduction of debt obligations through debt relief as it is
arguably considered as one of the effective ways for heavily indebted countries to
reduce poverty and achieve debt sustainability. Zambia’s foreign In November
2020, Zambia defaulted on a $42 million Eurobond payment, triggering a
sovereign debt default which has negatively affected the country’s investment
prospects as well as social sector spending.
3. The SAPSN demands for creation of structured forum between governments and
civil society organizations that deal with debt related matters in order to strengthen
collaboration and citizen participation in debt related discourse.
4. The movement is further demanding that the current legal framework in Zambia
which is the Public Debt Management Act No. 15 of 2022 be tightened in order to
avert abuse of authority of the executive in instances where parliament is
dissolved.
5. Part 2 of the Act provides for the establishing of the Debt Management Office
under the Ministry of finance and its functions. The Movements notes that having
it under the Ministry of Finance makes it less independent for such a task that

Debt Position Analysis of Zambia 16

 needs to build public confidence in the level of unrestricted use of expertise and
non-interference from the minister.
6. The Movement further demands enactment of the Access to Information Bill in
Zambia into law so as to enhance opacity in matters around debt contraction,
utilization and repayments.
7. The movement also demands for globally coordinated multilateral sovereignty
debt mechanisms to allocate and put together the traditional and private lenders
on an equal balance.]
8. Once fully operational, we recommend that the Public Debt Office be delinked
from the Minister of Finance’s office to ensure autonomy and also ensures that it
takes full responsibility to monitor the implementations of projects relating to public
debt.
9. The CSO movement noted the challenge with the development of the Medium
Term Debt Management Strategy in Zambia due to the fact that the debt
restructuring process between Zambia and its creditors had not been concluded
3 months before presentation of the 2024 National Budget. This had potential to
lower down confidence in the Medium Term Debt Management Strategy. The
Movement is therefore demanding for quick action by the Creditors to have
Zambia’s debt restructured before presentation of the 2024 National Budget.
10. The Movement demands that as a solution to the growing debt levels, the
Government should activate the sinking fund which is provided by law. This will
enable the Government to fully utilise domestic sources of revenue to fund
developmental programmes as well as meet its debt obligations without having to
refinance debts.

Debt Position Analysis of Zambia 17

CONCLUSION

It is worth noting that Zambia has made considerable strides with regards debt
transparency and debt related information publication. This debt audit revealed that
there was sufficient information given to the public with regards Zambia’s debt position.
The audit further revealed that Zambia was in a debt distress state based on the
statistics made available by the Government of the Republic Of Zambia through its
Ministry of Finance and National Planning and thus in need of debt stress resolution
mechanisms. Despite the good pathway that the IMF deal has offered towards
Zambia’s quest to achieve debt sustainability, one of the commitments in the IMF
programme is to a new Public Private Partnership (PPP) act among other reforms in
the tax system and around public expenditure. There is certainly a need to review the
present PPP practices in order to make them more viable, transparent and aligned to
international practice standards. Further, some stakeholders postulate that the IMF
programme fails to pass the burden onto those who are most able to pay as it does
not have an equity lens, least of all a gender equity lens even as it calls for increased
tax collection. Notwithstanding, it is an undeniable fact that debt servicing is being
undertaken at the expense of critical national development needs, especially those
related to social development which Zambia might not achieve the SDGs. The need
to achieve debt sustainability cannot therefore be over emphasised. The Civil Society
remains a critical stakeholder to ensuring Zambia achieves debt restructuring and also
upholds new legal reforms such as enacting the Access to Information Bill into Law as
to further access to information and avoid sliding backwards into further debt distress
or limiting debt transparency. The need to enhance domestic resources mobilisation
was echoed by different sections of society as a solution to the rising debt levels. The
Movement was further satisfied with the support it had received from Government
during the facilitation and review period which made this publication seamless.

Debt Position Analysis of Zambia 18

REFERENCE

1. https://www.imf.org/external/np/fin/tad/exfin2.aspx?memberkey1=1080&date1key
=2021-08-31) ii World Bank (2021) “International Debt Statistics 2021”.
Washington, DC: World Bank
2. https://www.mofnp.gov.zm
3. World Bank and IMF Guidelines for Public Debt Management of 2001, revised in
2014
4. https://indicator.report>goals>goal17
5. World Bank and IMF (2019) “Zambia - Joint World Bank-IMF Debt Sustainability
Analysis”. World Bank,Washington, DC. © World Bank; and International Monetary
Fund (IMF).
6. https://openknowledge.worldbank.org/handle/10986/32572
7. Nkulukusa, F. (2021) “Zambia’s Public Financial Management”, Presentation to the
Political Party Training on Advocacy for Prudent Debt Management; Protea
Chisamba Hotel, Chisamba, March
8. https://actionaid.org/news/2022/reactions-imf-programme
9. https://www.imf.org/en/About/Factsheets/IMF-Support-for-Low-Income-Countries

Debt Position Analysis of Zambia 19

Debt Position Analysis of Zambia 20