Zambia defaulted on its Eurobond obligations in November 2020 — the first African sovereign to do so during the Covid-19 era — and the economic overhang from that moment will define the mandate of whichever administration takes power next, according to reporting by Africanews. The country secured a landmark $6.3 billion debt restructuring deal with its official creditors in 2023 under the G20 Common Framework, but commercial creditor negotiations have moved slowly, leaving the full resolution of roughly $3 billion in Eurobond liabilities unfinished business for any incoming government.
The IMF's 38-month Extended Credit Facility, approved in 2022 and worth approximately $1.4 billion, remains the fiscal anchor keeping Zambia solvent. Disbursements under that programme are conditional on hitting targets around revenue collection, subsidy reform, and expenditure control — disciplines that have historically strained Zambian politics. Fuel and electricity subsidies, popular with voters, are precisely the kind of spending the Fund wants trimmed. The next administration will have to choose, early and visibly, between IMF compliance and electoral promises.
Copper is the variable that no government can fully control. Zambia sits on some of the world's largest copper reserves, and the metal accounts for the majority of its export earnings. Prices have been volatile: copper traded above $10,000 per tonne in early 2024 before pulling back, and the trajectory of the global energy transition — which requires vast quantities of copper for EV batteries and grid infrastructure — creates long-run optimism but near-term uncertainty. Any administration that stakes its budget projections on a copper price above $9,000 per tonne is taking a material risk.
Infrastructure investment, or the lack of it, compounds the challenge. Reporting by whoownsafrica.com on African business and infrastructure finance underscores the continent-wide pattern: countries that attract sustained infrastructure capital — roads, power, logistics — generate the secondary economic activity that broadens tax bases and reduces commodity dependence. Zambia's power sector is a specific pinch point; load-shedding of up to 12 hours a day during drought periods has suppressed industrial output and deterred foreign direct investment in exactly the processing industries the country needs to move copper from raw ore to higher-value refined products.
The fiscal numbers heading into any election are tight. Zambia's debt-to-GDP ratio peaked above 120% at the height of the crisis and has only partially recovered. Revenue collection, while improving under IMF-guided reforms by the Zambia Revenue Authority, still falls short of the 18–20% of GDP that most economists consider a minimum for a functional developmental state. Public sector wages consume a disproportionate share of what is collected, leaving limited headroom for capital spending.
For investors and operators already in the market, the clearest near-term risk is policy discontinuity. A new administration that signals willingness to renegotiate IMF conditionalities — or that moves to reverse privatisations in the mining or energy sector — could trigger a suspension of Fund disbursements and a renewed spike in borrowing costs. Zambia's Eurobonds, already deeply discounted during the default period, are sensitive instruments. Any rhetoric around resource nationalism will be priced swiftly by bond markets.
The opportunity, less discussed but equally real, is that a credible post-restructuring Zambia with a functioning IMF programme is one of the more investable frontier stories on the continent. The debt deal, once fully closed on the commercial side, removes the single largest overhang. Copper demand from the energy transition is structural, not cyclical. And the country's agricultural potential — it has some of the best-watered arable land in southern Africa — remains almost entirely underdeveloped as a diversification asset.
Why it matters: The next Zambian government's first 100 days will be read, in Lusaka and in London, as a signal of whether the country can convert a painful restructuring into a durable recovery — or whether it slides back into the fiscal indiscipline that caused the default in the first place. With roughly $3 billion in Eurobond negotiations still unresolved and IMF disbursement targets requiring continuous political will, the margin for error is narrow and the cost of missteps will be measured in percentage points of borrowing costs that Zambian households ultimately pay.