23/11/2025
ZAMBIA MOVES OUT OF DEBT DEFAULT STATUS AS REFORM MOMENTUM POWERS RATING UPGRADE
The Government of the Republic of Zambia welcomes S&P Global Ratings’ decision to upgrade the country’s long- and short-term foreign-currency sovereign credit ratings to ‘CCC+/C’ from ‘SD/SD’ (Selective Default—Junk Status) with a stable outlook. This action confirms Zambia’s exit from default status.
The upgrade is a major milestone in the country’s economic reconstruction journey and a clear signal of renewed international confidence in the reform programme being implemented under the leadership of His Excellency President Hakainde Hichilema. It reflects the steady fiscal discipline, strengthened policy credibility, and decisive measures taken to resolve the debt overhang that has constrained economic activity since 2020.
S&P’s rating action further affirms the improving macroeconomic and institutional landscape, driven by tangible progress in restructuring external debt, the resilience of the mining sector, and the stabilisation of inflation expectations. The stable outlook underscores S&P’s recognition that Zambia is gradually restoring fiscal space, improving external buffers, and rebuilding investor confidence despite tight global financing conditions.
S&P notes that Zambia has reached restructuring agreements with official and commercial creditors representing about 94 percent value of the debt within restructuring parameters. Only a small portion of commercial debt, largely with commercial banks, remains under negotiation. Importantly, S&P highlights that the risk posed by potential holdout creditors remains contained due to strong safeguards, including comparability-of-treatment principles under the G20 Common Framework For Debt Treatment and most-favoured-creditor clauses built into the restructured Eurobonds. These factors support the decision to lift Zambia from ‘SD’ and assign the long-term rating of ‘CCC+’.
This upgrade confirms the credibility of the Government’s debt strategy and signals that Zambia is transitioning away from a legacy of unsustainable borrowing toward a future of restored financial stability, reduced refinancing risks, and improved market standing.
The rating action also reflects Zambia’s strengthening fiscal position. Fiscal consolidation is projected to reduce government debt to 78.5 percent of GDP by 2028, continuing the downward correction from the 2020 peak. Interest costs as a share of revenue are also expected to ease steadily over the medium term, while inflation is projected to fall back into single-digit territory by 2026 as food supply improves and prudent monetary and fiscal policies continue to anchor expectations.
S&P acknowledges the recovery in external liquidity, with foreign reserves rising to US$5.2 billion due to IMF disbursements under the Extended Credit Facility, increased project inflows, Bank of Zambia forex purchases, and interest and reserve-related receipts.
Forward projections indicate continued reserve accumulation, supported by higher copper exports, favourable terms of trade, and strengthening investor sentiment.
Zambia’s growth outlook remains anchored in the mining sector, where copper production grew by 17.8 percent year-on-year in the first half of 2025. This reflects the impact of reforms in mining licensing, predictable regulation, energy stabilisation, and improved engagement with investors.
S&P underscores the sector’s central role in the economy, accounting for 14 percent of GDP, 70 percent of export earnings, and up to a quarter of government revenue. With global copper prices projected to average US$10,500 per metric tonne between 2025 and 2028, the sector will continue to support fiscal revenues, external balances, and investor confidence. The Government’s target of reaching 3 million metric tonnes of annual production by 2031 is reinforced by rising investment in copper, cobalt, nickel, and other minerals essential to the global energy transition.
S&P affirms that in 2026, Zambia’s fiscal consolidation and structural reforms will remain firmly on track. This aligns with the Government own commitment to reform. Despite the severe drought of 2024, S&P affirms that its economic impact was softer than initially anticipated due to diversification into renewable energy, solar and battery storage, thermal generation, and off-grid solutions. These collaborative efforts between the Government and the private sector are strengthening resilience, reducing vulnerability to climate shocks, and building a more secure foundation for long-term industrialisation and competitiveness.
The Government remains committed to sustaining fiscal discipline, completing the remaining components of the debt restructuring process, expanding energy capacity, strengthening social protection and empowerment programmes, and supporting private-sector-led growth for both local and foreign investors. In this regard, S&P notes that Zambia’s rating could be upgraded further if debt-to-GDP ratios decline faster than projected, fiscal balances improve more than expected, GDP growth accelerates, and reserves accumulate ahead of current forecasts. These prospects align with the Government’s long-term reform and transformation agenda.
Reflection by the Minister
Minister of Finance & National Planning Dr. Situmbeko Musokotwane, MP, has issued the following statement:
“The decision by S&P Global Ratings is a strong vote of confidence in Zambia’s economic reforms, governance credibility, and the resilience of our people. It confirms that Zambia has moved out of default status and is steadily restoring its place as a credible, stable, and investable economy.
“It also stands as a powerful acknowledgement of Zambia’s pioneering role under the G20 Common Framework. As one of the earliest countries to undergo this process, Zambia travelled a difficult and uncertain path—navigating complex negotiations, unprecedented legal and technical requirements, and the economic pressures of debt distress. This upgrade is therefore not only recognition of economic progress, but a testament to the determination, discipline, and endurance of the Government and the Zambian people.
“The Government extends its profound appreciation to all creditors—official, bilateral, multilateral, and commercial—as well as our cooperating partners, civil society, private-sector actors, and the Zambian public for standing with the nation through its most challenging period. Their patience, dialogue, and constructive engagement made it possible to restore stability and place the country on a sustainable economic path.
“This upgrade is an affirmation that Government policies aimed at debt sustainability, export-led growth, stable macro-economic environment, improved governance, and expanded energy capacity form a coherent and credible strategy for national resilience and long-term prosperity. The Government remains committed to ensuring that improved ratings, stronger fundamentals, and restored fiscal health translate into more jobs, stable prices, greater opportunities for youth and women, stronger local business participation, and shared prosperity for all Zambians.”
Ends.
