An Economist has urged the government to adopt an integrated and forward-looking approach to manage Zambia’s escalating debt levels, warning that fragmented solutions could pose systemic risks to the economy.
Kelvin Chisanga noted that Zambia’s total debt—comprising both government and private sector obligations—has reached alarming levels, now estimated at nearly twice the size of the country’s Gross Domestic Product (GDP).
Mr. Chisanga expressed concern that the domestic debt profile continues to grow without adequate attention.
“Zambia’s current debt landscape presents a complex challenge that requires careful coordination, strategic foresight, and proactive risk management. With total debt approaching nearly double the country’s GDP, the stakes could be high especially with consideration to non attendance on domestic debt profile which has not been attended and keeps growing,” Mr. Chisanga said.
He explained that cross-default clauses embedded in many loan agreements further heighten the risks associated with Zambia’s debt.
“A default on a single debt instrument could trigger immediate repayment demands across multiple loans, creating systemic risk that could destabilize the economy,” he added.
Mr. Chisanga emphasized that Zambia must move away from piecemeal approaches and instead adopt a holistic debt management strategy that tackles both external and domestic obligations simultaneously.
Outlining key elements of such a strategy, he proposed simultaneous management of external and domestic debt, stating that actions in one area must be aligned with the other to avoid unintended consequences on fiscal stability or investor confidence.
Mr. Chisanga also proposed stronger collaboration with the private sector as well as enhanced revenue mobilization in addressing the debt burden.
“Given that private external borrowing contributes significantly to overall exposure, close collaboration is essential to mitigate cascading risks. Improved revenue mobilization and prudent public spending are critical to reducing reliance on borrowing while maintaining investment in growth sectors,” Mr. Chisanga said.
He explained that Dynamic debt sustainability models can help anticipate risks, manage maturities, and maintain liquidity buffers to avoid triggering cross-defaults.
“Zambia’s debt strategy must ensure that today’s obligations do not compromise the economic potential and well-being of future generations,” he stressed.
Mr. Chisanga pointed out that while the country’s debt management task remains delicate, effective coordination and discipline could turn the situation around.
