Zambia

What it is

Zambia is a landlocked nation of 19.7 million people in Southern Africa, bordering eight countries, with its capital at Lusaka. The economy is built almost entirely on copper mining: the Copperbelt region, running north from Lusaka to the Democratic Republic of Congo border, has produced copper since the 1920s and holds some of the world's largest known reserves. In sovereign finance, Zambia matters as the first African country to complete debt restructuring under the G20 Common Framework, a multilateral process designed to coordinate official and private creditors that had long been criticised as too slow to work. Zambia's case set precedents for how Chinese policy banks, Western bilateral creditors, and private bondholders share losses in a sovereign workout.

History

Zambia entered international capital markets in 2012, issuing a US$750 million Eurobond at a 5.4% coupon, among the first sub-Saharan sovereigns to access the market at that rate. Two further Eurobonds followed: US$1 billion in 2014 at 8.5% and US$1.25 billion in 2015 at 9%, bringing total Eurobond debt to US$3 billion. The proceeds funded infrastructure, but the copper price crash starting in 2015, combined with rising domestic debt and fuel subsidies, eroded fiscal space rapidly. By 2019, debt service consumed more than a third of government revenues. The COVID-19 shock removed the final buffer: in November 2020, Zambia missed a US$42.5 million Eurobond coupon payment, becoming the first African country to default during the pandemic.

Zambia applied for G20 Common Framework treatment in February 2021, but creditor negotiations stretched over two years. China, as the largest single bilateral lender, held the pivotal seat on the Official Creditor Committee. A heads-of-terms agreement with official creditors was reached in June 2023, followed by a formal Memorandum of Understanding with the Official Creditor Committee on 14 October 2023. The private Eurobond restructuring closed on 25 March 2024, completing the workout.

Current state

The IMF Extended Credit Facility, approved 31 August 2022 at SDR 978.2 million (approximately US$1.3 billion) and later augmented to SDR 1,271.66 million (approximately US$1.7 billion), anchors Zambia's post-default recovery programme. Six reviews were completed as of January 2026. Zambia's public debt ratio fell from 133.4% of GDP in 2023 to 93.4% in 2025 as restructured terms took effect. GDP grew an estimated 4.6% in 2025, driven by mining, agriculture, and tourism, with growth of 5.3% projected for 2026 to 2028. Lusaka held US$6.5 billion in foreign exchange reserves as of June 2026, built from copper revenues and tight post-restructuring monetary policy. President Hakainde Hichilema, who won a landslide in August 2021 on an economic reform platform, faces re-election on 13 August 2026; the reserves debate sits at the centre of the campaign.

Relationships

China was Zambia's largest bilateral official creditor, making Beijing's participation in the Official Creditor Committee the critical variable for the G20 Common Framework deal. The framework's comparable-treatment requirement, which insists that official and private creditors accept similar losses, prolonged negotiations by forcing Chinese policy banks to align with Western bilateral terms. The IMF and World Bank, with a combined lending commitment of US$3.2 billion, served as financial anchors throughout. The Lobito Corridor railway, connecting Zambia's Copperbelt to the Angolan port of Lobito and the Atlantic, is a direct downstream consequence of post-restructuring stability: no infrastructure financier would commit to a multi-billion rail project while Zambia remained in default. Copper is the binding link across all these relationships: the 1 million tonne production target for 2026 would, if met, materially expand the tax revenues that underpin Zambia's debt-service capacity.

What to watch

• August 13, 2026 general election results: whether Hichilema wins a second term would signal whether African electorates reward macroeconomic discipline over visible cost-of-living relief.
• IMF ECF remaining reviews: continued compliance with the primary surplus trajectory is what sustains Zambia's access to international borrowing; any slippage triggers a programme suspension risk.
• Copper price and output: Zambia's debt service capacity is directly indexed to the copper price, and the Copperbelt's ability to reach 1 million tonnes in 2026 is the single largest swing variable in Zambia's fiscal outlook.
• G20 Common Framework precedent: how creditors and the IMF cite Zambia's case in ongoing restructurings for Ghana, Sri Lanka, and Ethiopia will shape the next generation of sovereign debt workouts.