Zambia presents an evidently different macroeconomic image as a result of ease in inflation, strengthened foreign exchange reserves, and restored confidence by the international financial institutions and has significantly progressed in the area of debt restructuring. Annual inflation slowed to 6.5% in June, its lowest level in more than eight years, underscoring Zambia’s economic recovery after its debt crisis, though many households still say they are struggling. The International Monetary Fund projects Zambia’s economy to grow 4.3% this year from 3.8% last year, and foreign investment has picked up.
Besides, the central question, therefore, remains: has Zambia truly rebounded under President Hakainde Hichilema, or has macroeconomic stabilisation yet to translate into broad-based economic prosperity? The answer is nuanced.
What is the economic crisis Hichilema inherited?
After the general elections of August 2021, Zambia’s new administration faces a daunting challenge of reversing economic contraction, lowering income-eroding inflation, and addressing the unsustainable national debt. Then, the country has been one of the few to seek debt restructuring under the G20’s new Common Framework for Debt Treatments, and its immediate priorities include a prospective agreement with the International Monetary Fund (IMF).
During that period, young Zambians were eager for jobs and improved living standards. But the government’s ambition to create more jobs and achieve middle-income status depended on both attracting new investment into its copper sector and pursuing a programme of economic diversification supporting growth beyond the mining industry.
In 2011, when the Patriotic Front first came to power, Zambia’s external debt stood at US$1.9 billion. By the time they left office in 2021, that figure had exploded to US$18.6 billion. President Hichilema did what was politically painful but economically essential: he engaged the IMF, entered a structured reform programme, and successfully restructured 94% of Zambia’s external debt. Annual debt service payments, the money that was being swallowed by interest before it could reach schools or clinics, have been reduced from US$2.3 billion per year to approximately US$900 million. That is over US$1.4 billion redirected toward Zambian lives every single year.
In July, Finance Minister Situmbeko Musokotwane noted that Zambia is aiming to agree a new International Monetary Fund programme by the end of the year as it seeks to boost investment and growth after emerging from a sovereign debt default. The report said the copper-rich Southern African country’s previous $1.7 billion IMF programme ended in January, with the funding underpinning Zambia’s debt restructuring.
“Our wish is that certainly before the end of the year, we should have agreed with the Fund,” Musokotwane told Reuters in an interview. “We need to do more than just get out of the debt crisis. We need to attract investments now so that growth takes place and jobs are created,” Musokotwane added.
A new programme will centre on channelling capital into mining, energy and agriculture to fund job creation for a population that has grown sevenfold since independence, he said. That also meant it was “too soon” for a new international bond issuance, with the government wanting to cement its IMF relationship and rebuild investor confidence before seeking fresh market financing.
How Macroeconomic Indicators Show Significant Improvement
However, in March 2026, authorities updated the 2025 real GDP growth estimate to 3.8%—the same level as 2024—due to underperformance in information communications and technology, wholesale and retail trade, and finance and insurance. Real GDP per capita growth increased to 2.4% from 1.0% over 2024–25.
Fiscal pressures have intensified in 2026. The primary surplus is now projected at 1.1 per cent of GDP, compared to 3.8 per cent at the time of the Sixth Review of the completed ECF programme. The deterioration reflects weaker tax collection, including from the suspension of fuel VAT and excise duties; spending pressures in the run-up to the elections; a civil service wage adjustment; and agricultural subsidy overruns of about 1.3 per cent of GDP. In addition, significant fiscal risks stemming from the Food Reserve Agency will require decisive mitigating measures. Domestic VAT revenue collection continues to underperform, reflecting structural and administrative weaknesses at the Zambia Revenue Authority, while the accumulation of a VAT refund backlog is weighing on taxpayer compliance. Advancing fiscal structural reforms remains essential to generate durable revenue gains, broaden the tax base, and support a more progressive, equitable, and less complex tax system.
However, surging global copper demand and a wave of new mining investment would support growth, he said. Musokotwane said demand for metals including copper “is going to give us a big surge in terms of growth in the coming few years”. He said priorities for the next administration following the August 13 election, opens new tab, included reforms on tax. “We have to push hard on more tax revenue collection, not by imposing new taxes but by encouraging and pushing through higher efficiency,” he said
The southern African country’s previous $1.7-billion programme with the International Monetary Fund, which underpinned the government’s sovereign debt restructuring, ended in January. Investors see a new IMF programme as the clearest test of policy continuity after the debt restructuring process. They are watching for two things in particular: how quickly talks conclude and whether the conditionality shifts from crisis management towards boosting growth. Any new deal will need to retain fiscal discipline while pivoting toward growth.
Zambians vote on August 13 in presidential and parliamentary elections, with polls and investors widely expecting President Hakainde Hichilema to defeat a fragmented opposition led by Brian Mundubile. Mundubile, a 55-year-old lawyer and member of parliament before the election was called, has never run for president before and emerged as a late contender after a fractured opposition rallied behind him. Although Zambia has a history of democratic transitions, the opposition has accused Hichilema of restricting its ability to campaign and suppressing political dissent, charges he denies.
However, the recent policy rate cut reflects the Bank of Zambia’s (BoZ) improved inflation outlook. Experts say the BoZ should remain guided by forward-looking inflation forecasts and alert to upside risks, including from the Middle East conflict. Strong coordination among fiscal and monetary policies will be critical to anchoring inflation expectations. In response to the conflict in the Middle East, the authorities suspended the TAZAMA open-access framework.
Political and Economic Outlook Ahead of August Election
Zambia’s president, Hakainde Hichilema, and his party, the United Party for National Development, according to the constitution, will retain power until the 2026 elections. The southern African country’s previous $1.7-billion programme with the International Monetary Fund, which underpinned the government’s sovereign debt restructuring, ended in January. Investors see a new IMF programme as the clearest test of policy continuity after the debt restructuring process. They are watching for two things in particular: how quickly talks conclude and whether the conditionality shifts from crisis management towards boosting growth. Any new deal will need to retain fiscal discipline while pivoting toward growth.
Copper is the backbone of Zambia’s economy, generating 70% of export earnings and a key source of government revenue, investment and jobs. Investors will be watching whether Zambia can convert its foreign direct investment pipeline in the copper sector — including the return of Vedanta, continued investment from Barrick, and First Quantum’s ongoing expansion — into actual production gains, given ambitions to triple output over the longer term from roughly 1 million tonnes now.
On policy, Zambia has said it has no plans to change mining tax rates. But investors will be tracking the implementation of a local-content bill requiring miners to raise domestic procurement toward 40% over three to four years from 20%. Local suppliers often lack the financing and technical capacity to meet mining industry standards, meaning foreign operators could face supply-chain strain or enforcement uncertainty just as they push ahead with major expansions.
Investors would like to see more spending on exploration, with only two major new mines coming online in the past decade. Mining, which makes up more than 10% of Zambia’s GDP, is a key driver of growth.
Other top priorities include increased government efficiencies in tax collection and overhauling the grain market so that private buyers, and not government, absorb Zambia’s growing maize surplus. Standard Chartered says a bumper maize harvest, with output expected to rise to a record this year of 28% year-on-year, will force the government to buy more grain from local farmers. Along with election spending, the bank sees this as a key source of fiscal pressure. The bank forecasts a 2026 fiscal deficit of about 5.0% of GDP, more than double the government’s original target of 2.1%. Investors worry that without a shift toward private sector-led grain marketing, the state’s purchasing obligations will continue to rise as production expands toward the government’s target of 10 million tonnes.
On the economic outlook, Musokotwane pointed to risks to growth, including potential fuel price rises linked to the U.S.-Israeli war with Iran and a possible drought next year that could strain hydropower generation. While investors say Zambia’s ability to expand copper output will depend heavily on improving power supply after drought-related shortages exposed vulnerabilities in the hydro-dependent electricity system. While investment in solar generation is accelerating, investors will be watching whether reforms can secure reliable power for planned mining expansions.
Conclusion
When President Hichilema assumed office, Zambia was posting a GDP growth rate of -2.8%, inflation had reached 22%, and the country had become the first African nation to default on its debt during the COVID pandemic. The economy was not just struggling; it was in freefall. Today, those same indicators have been reversed. GDP growth is projected at 6.4% for 2026, inflation has been brought down to single digits, and Zambia’s gross international reserves now stand above US$6.5 billion, a figure that would have been unimaginable at the start of this administration. The kwacha has stabilised. The IMF, rarely given to flattery, has confirmed a primary fiscal surplus of 3.1% of GDP in 2025.
Election monitors have flagged risks around voter-card confiscation and vote-buying, while analysts warn of a risk of localised unrest, particularly in the Copperbelt and northern provinces or among disillusioned urban youth, if results are unexpected or contested. Investors are also watching weather and power risks. Zambia remains highly vulnerable to drought because of its dependence on hydropower and rain-fed agriculture. The 2023-24 El Niño drought caused widespread crop failures and power shortages, forcing severe load-shedding and weighing on economic activity. Another poor rainy season could threaten both electricity generation and growth.
The vote is shaping up as a referendum on Hichilema’s economic record since he took office in 2021, inheriting a country reeling from a sovereign debt default. Africa’s second-largest copper producer has enjoyed an economic rebound supported by high copper prices after restructuring its debt, but many people still feel squeezed by the cost of living, which the opposition will aim to exploit. “A lot of our families still need support beyond what we are delivering today, but I want you to know we hear you,” Hichilema told supporters at his campaign launch in the capital Lusaka.
The case for re-electing President Hakainde Hichilema is not built on hope — it is built on evidence. Debt restructured. Children are educated. Mines reopened. Jobs created. Reserves rebuilt. Inflation tamed. On August 13, 2026, Zambia has a simple choice: continue building, or start over. The answer is clear.
