Keypoints:
- S&P lifts Zambia from default
- Debt restructuring nears completion
- Copper output strengthens outlook
ZAMBIA has secured a significant boost to its economic rebuilding efforts after S&P Global Ratings formally removed the country from its default category, upgrading its long- and short-term foreign-currency ratings to ‘CCC+/C’ from ‘SD’ (selective default). Announced on Friday, the move represents one of the clearest signals yet that the copper-rich nation is emerging from years of debt distress and fiscal turbulence.
Finance Minister Situmbeko Musokotwane said in a statement on Sunday that the upgrade confirmed Zambia was ‘steadily restoring its place as a credible and investable economy’. He added that the government remained committed to fiscal discipline, while pushing ahead with plans to expand energy access and complete the remaining steps in its debt restructuring programme.
The upgrade comes on the back of the government’s rosier fiscal projections released in September, which forecast economic growth rising above six percent in 2026 and a budget deficit expected to more than halve as the effects of drought ease and reforms begin to take hold.
Restructuring effort enters final stretch
S&P said its decision reflects Zambia’s progress in restructuring commercial debt after several years of negotiations. The government has now secured agreements with official and commercial creditors representing about ninety-four percent of the $13.3bn included in the restructuring perimeter.
Only a small portion — less than three percent — of commercial debt remains to be finalised. Several bilateral creditor arrangements are also pending, and preferred creditor treatment issues still need to be resolved before the process is fully complete.
The ratings agency affirmed its ‘CCC+’ issue ratings on Zambia’s debt and maintained the ‘CCC+/C’ long- and short-term ratings on local-currency obligations. Its stable outlook reflects a balance between improved fiscal performance and official financial support, and the risks posed by Zambia’s tight financing conditions and substantial near-term borrowing needs.
Copper drives economic momentum
A surge in copper production is helping to reinforce optimism around Zambia’s recovery. The mining sector accounts for around 14 percent of GDP, up to 70 percent of export receipts, and between 20-25 percent of government revenue.
Production rose by 17.8 percent year-on-year in the first half of 2025, a performance that strengthens government ambitions to raise output to three million tonnes annually by 2031. Higher copper prices are expected to sustain this momentum, with S&P forecasting an average of $10,500 per metric tonne through 2025 and across 2026–2028.
Fiscal path improves despite political tensions
Zambia enters an increasingly tense political cycle ahead of the 2026 elections. President Hakainde Hichilema is expected to face a strong challenge from the United Kwacha Alliance (UKA), contributing to uncertainty over the policy environment in the coming year.
Despite this backdrop, S&P projects fiscal consolidation to continue through 2028. Net general government debt is forecast to moderate to 78.5 percent of GDP by the end of the period, down from the peak levels recorded during the debt crisis. Interest costs are expected to ease as well, averaging 24.6 percent of revenues over the next three years, compared with 28.2 percent in 2024.
Inflation is projected to fall to an average of 13.8 percent in 2025 and reach nine percent in 2026. The Bank of Zambia reduced its policy rate by twenty-five basis points to 14.25 percent in November 2025, signalling confidence that inflationary pressures are gradually subsiding.
Reserves strengthened by IMF inflows
Zambia’s foreign exchange reserves rose to $5.2bn at the end of September, supported by an IMF disbursement of $191.1m under the Extended Credit Facility. The stronger reserve position has bolstered the kwacha and reinforced wider market confidence in the country’s recovery trajectory.
With debt restructuring close to completion and fiscal indicators improving, S&P’s upgrade provides a critical signal to global investors that Zambia’s economic reform programme is gaining meaningful traction.
