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PwC report reveals progress in Zambia’s debt restructuring, admits domestic arrears remain a challenge

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Zambia’s progress on its debt restructuring journey reflects resilience and strategic financial management, according to a recent analysis by PwC.

The report, Turning a New Leaf: The Latest on Zambia’s Debt Restructuring Journey, highlighted strides toward debt sustainability but underscored the ongoing challenge of domestic arrears.

PwC’s analysis noted that restructuring 89 percent of Zambia’s foreign debt had provided essential stability in repayment commitments.

This restructuring had reduced the debt service burden significantly, from a peak of 79.6 percent of domestic revenues in 2021 to a projected 31 percent by 2025, enabling a reallocation of resources to other critical budget areas and improving fiscal discipline.

“The steady increase in foreign debt obligations, driven by concessional borrowing, alongside controlled domestic borrowing, reflects a balanced approach to managing Zambia’s financial obligations,” PwC stated.

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However, PwC cautioned that addressing domestic arrears remained urgent to stimulate economic activity and support suppliers affected by delayed payments.

The report also points to significant domestic debt maturities in the coming years, stressing the need for proactive management to avoid liquidity pressures and ensure that the benefits of restructuring are sustained.

The auditors concluded that Zambia’s restructuring efforts and the resulting fiscal space illustrate the importance of continued commitment to debt sustainability.

PwC highlighted that strategies for dismantling arrears, managing debt maturities, and upholding fiscal discipline would be crucial for achieving long-term economic stability and growth.

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