Civil Society for Poverty Reduction (CSPR) says the K16.1 billion released by the Treasury in August 2026, reflects responsible short-term fiscal management but also highlights continued constraints in Zambia’s fiscal space.
In August, the Treasury released K16.1 billion to finance public service delivery, debt obligations, social protection programmes and infrastructure development.
Debt service and arrears accounted for approximately 47 percent of the August allocation, while only K1.7 billion, representing 10.5 percent, was channelled towards transfers, subsidies and social benefits.
Commenting on the development, CSPR Executive Director Isabel Mukelabai said the release demonstrates Government’s commitment to meeting essential financial obligations, although a significant proportion of the funds went towards debt servicing and arrears.
Ms. Mukelabai noted that programmes benefiting from the August allocation included the Social Cash Transfer, which supports vulnerable households, as well as grant-aided institutions such as hospitals.
She said timely debt payments and arrears clearance could strengthen Zambia’s fiscal credibility, improve liquidity for suppliers and contribute to financial-system stability.
“It is our position that timely debt payments and arrears clearance can strengthen fiscal credibility, improve liquidity for suppliers and protect financial-system stability,” she said.
Ms. Mukelabai, however, cautioned that the composition of the August release demonstrates that Zambia continues to operate within a constrained fiscal environment.
She noted that capital expenditure accounted for only about 5.6 percent of the August allocation, leaving limited resources for new investments and front-line public services.
“The pattern is consistent with CSPR’s mid-year analysis where we observed that in June, K34.9 billion of the K49.1 billion released, which is about 71 percent, went to debt service and arrears,” Ms. Mukelabai noted.
Ms. Mukelabai further observed that the organization’s mid-year assessment had identified pressure on the original fiscal framework, with first-quarter tax revenue, non-tax revenue and grants falling below projections while expenditure exceeded its quarterly target.
She said the K26.3 billion supplementary budget, equivalent to 10.4 percent of the original budget, included K7.5 billion in additional domestic financing. “This could raise indicative domestic borrowing from K21.62 billion to K29.12 billion, or approximately 3.15% of the original GDP base, above the 2.3% target,” she stated.
According to the CSPR Executive Director, the Bank of Zambia’s projected fiscal deficit of 3.5 percent of GDP, compared with the original target of 2.1 percent, further demonstrates the pressure on public finances.
Ms. Mukelabai stressed that CSPR would therefore not characterize the August Treasury release as irresponsible simply because debt obligations received a substantial share.
“Meeting debt-service commitments and clearing verified arrears are necessary elements of responsible fiscal management. Nevertheless, the allocation should not be interpreted as evidence that Zambia has adequate fiscal space. Rather, it demonstrates that the Government is managing immediate obligations within a constrained fiscal environment,” Ms. Mukelabai said.
She stressed the need for continued funding towards social protection, health institutions and infrastructure to safeguard vulnerable households and sustain public service delivery.
