Post-default gains under scrutiny
Zambia exited its 38-month IMF Extended Credit Facility (ECF) in January 2026, having drawn about US$1.7 billion to support fiscal stabilisation and structural reforms. The programme helped anchor a shift from crisis management after Zambia’s 2020 sovereign default, the first by an African state during the Covid-19 pandemic.
Debt restructuring has advanced. An IMF staff mission to Lusaka between late April and mid-May reported that agreements now cover around 94% of the restructuring perimeter, reflecting deals with official and several private creditors. However, the Fund still classifies Zambia’s public debt as sustainable but at high risk of overall and external debt distress, underlining how thin the safety margin remains.
Despite these risks, macro indicators look stronger heading into the polls. Inflation fell to 6.5% in June 2026, the lowest reading in more than eight years and within the Bank of Zambia‘s 6–8% target band. The IMF projects real GDP growth of about 4.3% in 2026, up from 3.8% in 2025, supported by high copper prices and improved confidence after restructuring.
Yet the fiscal story is more nuanced. The 2026 budget plans spending of K253.1 billion, or 27.4% of GDP, financed largely by K206.5 billion in domestic revenue, K12.1 billion in grants and K34.5 billion in borrowing. The primary surplus is expected to narrow from 3.1% of GDP in 2025 to 1.1% in 2026, partly reflecting pre-election pressures. Investors will read the vote as a judgement on whether the next administration can protect this hard-won stability while responding to cost-of-living strains.
Copper ambitions and the next IMF deal
Copper is the backbone of Zambia’s economy, providing roughly 70% of export earnings and a major share of fiscal revenue and jobs. Authorities have pledged to triple annual copper output from around one million tonnes, seeking to turn the debt-recovery phase into a sustained investment-led expansion.
Delivering on that pledge will require more than price tailwinds. Analysts highlight three conditions: a new IMF arrangement focused on growth, resolution of remaining creditor issues, and stronger efficiency in the copper sector. Zambia’s previous ECF ended in January 2026, leaving a gap in formal IMF engagement just as the country weighs how much fiscal room it has for new infrastructure and social spending.
The IMF’s latest assessment signals that while debt is now considered sustainable, the high-risk classification demands continued fiscal discipline and careful management of new borrowing. For investors, the Zambia election economy debate centres on whether the next government can negotiate a successor programme that locks in prudent budgeting yet allows targeted investment in power reliability, transport links and local content measures that support mining productivity.
Meanwhile, new local content rules and an unreliable power supply have emerged as practical constraints on the copper expansion strategy. If addressed, they could strengthen Zambia’s attractiveness for fresh mining capital; if not, they risk capping output and export earnings. The election will also shape policy continuity for sector regulation, which mining houses and bondholders alike view as critical for long-term commitments.
For capital-markets investors, the vote functions as a live test of Zambia’s ability to shift from post-default repair to growth without slipping back into fiscal stress. The priority signals to watch after polling day will be: the speed and shape of negotiations on a new IMF programme, progress in bringing the remaining 6% of creditors into the restructuring perimeter, and concrete moves to unblock copper-sector bottlenecks while holding the primary surplus close to target.
How the Zambia election economy debate is resolved in policy terms will shape sovereign spreads, mining flows and broader risk appetite for the country over the next several years.
