Zambia to Spend K212 Billion Servicing Debt Over Three Years, Outstripping Combined Budget for FISP, CDF and Free Education.
Zambia will spend K212.2 billion servicing its debt between 2027 and 2029. That is K63.6 billion more than the Government plans to spend over the same period on transfers covering the Farmer Input Support Programme (FISP), the Constituency Development Fund (CDF), free education and school feeding combined. The figures are set out in the 2027-2029 Medium-Term Budget Plan Green Paper, the Treasury’s first spending blueprint for the new presidential term. Debt service in 2027 alone is projected at K68.4 billion, equivalent to 6.8 percent of gross domestic product (GDP). The bill covers interest payments on domestic and external debt as well as principal repayments.
The Green Paper comes as the country’s external debt stock falls. The Ministry of Finance and National Planning said external debt stood at US$15.36 billion at the end of June 2026, down five percent from US$16.15 billion at the end of December 2025. The ministry attributed the decline to a liability management operation in the second quarter of 2026. That operation included the partial repurchase of Eurobond obligations through a debt-for-energy conversion supported by the African Development Bank (AfDB).
Beyond its creditors, the Government also owes money at home. It plans to set aside K37.8 billion to clear domestic arrears over the three years: K15 billion in 2027, K10 billion in 2028 and K12.9 billion in 2029. These arrears are unpaid bills owed to suppliers, contractors and other local creditors. That brings the combined sum earmarked for external and domestic obligations to about K250 billion over the medium term.
Social protection receives K63.2 billion over the period to fund the Social Cash Transfer, the Food Security Pack and pension payments. That allocation grows from K17.3 billion in 2027 to K22.1 billion in 2028 and K23.8 billion in 2029. The Government also plans to spend K140.4 billion on assets, made up of K125.1 billion in non-financial assets and K15.3 billion in financial assets. Taken together, social benefits and capital spending over the three years still fall short of the debt service bill by only about K8.6 billion.
The capital programme is led by roads, which take K42.1 billion over the three years. Construction of hospitals and public universities receives K26 billion, and provincial aerodromes K9.9 billion. Water and sanitation infrastructure is allocated K6.9 billion and the rural electrification programme K2.4 billion. Roads alone therefore attract more money than water, electrification and aerodromes combined.
To pay for these commitments, the Treasury is turning to the taxpayer. The Green Paper says the Government will continue to prioritise domestic resource mobilisation to create sustainable fiscal space for development. It is developing a Medium-Term Revenue Strategy for 2027-2031, designed to widen the tax base and improve collection. Proposed measures include reviewing and streamlining tax incentives, strengthening property taxation, and using mobile digital payment platforms to improve compliance. The strategy also aims to bring informal businesses and small and medium-sized enterprises into the tax net, including artisanal miners.
The Government has also signalled a tougher line on tax evasion, including smuggling, which it says undermines revenue sustainability and hurts local production. The push to widen the tax base comes as the administration courts foreign investors under the Grow Zambia Agenda, whose stated goal is to double the size of the economy. Special Assistant to the President for Finance and Investment Jito Kayumba said a larger economy would generate more transactions, more government revenue and more liquidity. He argued that this would ultimately lower the cost of living.
“The higher the transactions, the more government revenue, liquidity in circulation, and economic stimulation,” Mr Kayumba said.
The Green Paper’s figures lay out the arithmetic the new term must solve. Debt service falls as a share of GDP only if the economy grows as projected. Every kwacha collected in new taxes must also stretch across creditors, farmers, pupils, pensioners and road contractors. The Green Paper will now go through consultations before the 2027 national budget is presented to Parliament.
