Country Summary

Macroeconomic performance

Real GDP growth has continued, at an estimated 4.0% in 2018, compared with 4.1% in 2017. Agriculture output contracted by more than 35% due to a rain shortage in early 2018. Copper production continued to increase by an estimated 4%–4.5% in 2018. Construction also contributed to growth, thanks to public infrastructure projects and investment in commercial buildings and residential housing, towing cement production, which increased at an estimated 10% in 2018.

High capital investment, high debt servicing cost, and a large wage bill have contributed to fiscal deficits, which peaked at 9.3% of GDP in 2015 before declining to 7.8% in 2017 and an estimated 7.1% in 2018, thanks to a fiscal consolidation program. However, the 2018 deficit still missed its target, 6.1% of GDP, due mainly to high capital spending, rising debt servicing, and growing arrears.

The debt-to-GDP ratio increased from 25% of GDP to 61% between 2012 and 2016, raising concern. In 2018, domestic debt was an estimated 20% of GDP while external debt, including government guarantees, fell to an estimated 39.2% of GDP. High public and publicly guaranteed debt led to Zambia being classified as being at high risk of debt distress in 2017.

Inflation increased to an estimated 7.6% in 2018 from 6.6% in 2017. The relative price stability led the central bank to reduce the policy rate from 15.5% to 9.75% in February 2018. Average lending rates fell from 29.5% in 2016 to 23.7% in September 2018. Gross international reserves continued to fall from $2.4 billion in 2016 to $2.1 billion in 2017 and were an estimated $1.7 billion by the end of 2018, corresponding to 2.5 months of imports.

Tailwinds and headwinds

The medium-term outlook remains positive, with growth projected at 4.2% in 2019 and 4.3% in 2020. Agricultural production declined in 2018 due to poor rain distribution but is expected to rebound in 2019. Mining output is expected to increase by 4%–5% in 2019, benefiting from improvements in electricity generation associated with the replenishment of the Kariba Dam due to good weather conditions. However, lower demand from China associated with escalating trade tensions is expected to further dampen the copper price, which fell by more than 18% in 2018. To raise tax revenue, the government is planning to change the mining tax regime, raising royalties by 1.5 percentage points and removing mineral royalty tax deductions from corporate taxes. On the downside, tax reforms might reduce Zambia’s competitiveness in attracting mining companies and could discourage mineral exploration. Another key downside risk to the outlook arises from the slow pace of fiscal consolidation, though a debt default is unlikely in the short term, given the probability of China extending tenure on Zambian debt.

Improving debt sustainability should remain a key priority over the medium term. In addition to strengthening the government’s fiscal position, an active debt management strategy would help strengthen confidence in the economy and rebuild some much needed fiscal space. To improve investor confidence in Zambia, the government announced measures aimed at improving debt sustainability and returning to a rating of moderate risk of debt distress. The measures include an indefinite postponement of new infrastructure projects and the cancellation of some contracted loans that are yet to disburse.

Source: African Economic Outlook 2019

Fixed Income


The government securities yield curve extended to 15 years with three benchmark points along the curve (3-5 and 10 years). 

The strategy is to issue securities for  domestic financing needs, to roll over debt and boost market development. 

Issuance strategy 

The national debt strategy aims to reach the following domestic debt structure: 40% for T-Bills and 60% for T-Bonds. 

Benchmark issues 

Up to 2014, benchmark bonds (of 3-5 and 10 years) were re-opened while the other bonds were new lines. The single-price auction method is used by Zambia. While constructing the yield curve is a consideration, it is yet seen as the utmost priority. The focus remains on meeting domestic financing needs and developing the market for issuance strategy, etc. The criteria used to choose the benchmark is to track the most popular and most liquid bonds. 

Yield curve 

Yield curve calculation models 

There is no benchmark yield curve in Zambia although the only yield curve is constructed from the primary market yields of government securities. 

Interpolation methods 

There is no secondary yield curve in Zambia, but the primary market yield curve is interpolated using the simple extrapolation method.

Yield curve managed by 

Although there is no formal yield curve in Zambia, the Bank of Zambia (Central Bank) is responsible for calculating the curve from the primary market.

Display platform 

There is no benchmark yields curve in Zambia but the Bank of Zambia website shows all the yields from the primary market. 

Challenges in building an efficient yield curve 

  • Lack of transparency: the challenge in building an efficient yield curve is that there is no institution that publishes secondary market prices/yields at which bonds are traded, hence the difficulty in constructing an efficient yield curve. 

Guide to Buying Bonds

Procedures for market participation

The primary market for Government securities is open to all financial institutions and to the non-bank entities. The minimum amount to invest in non-competitive bids is K1,000 and the minimum amount to invest in a competitive bid is K 30,000. Bidders are allowed to participate to a maximum of one bid per maturity bucket. The administrative steps for transaction settlement are provided on the document about the rules and practices on government securities. 

There are also tender sales to the non-bank entities through authorized dealers.


Interest income on Treasury bonds is taxable at a rate of 15%.

There is no capital gains tax.

Settlement cycle

For Government bonds, settlement is done on Monday, with a settlement cycle of T+3. Similar to treasury bills, settlement of government bonds is through commercial banks’ accounts at the Central Bank. 

Market restrictions

Capital Controls

There are little to no capital controls in Zambia.

Restrictions on foreign exchange and profit repatriation

All foreign exchange controls in Zambia were removed. As a result, there is no exchange control on current or capital account transactions.  Investors are free to repatriate capital investments, interest, profit, dividends, management fees, technical fees, and royalties. However, the recent volatility of the Zambian Kwacha has seen the BoZ adopt a more restrictive foreign exchange stance. In 2012 and 2013, the government instituted two new regulations (Statutory Instruments 32 and 33) aimed at monitoring the flows of foreign currency in the country.

Credit rating

In May 2015, Moody's confirmed Zambia B1 rating but changed its outlook from table to negative; Fitch affirm B rating and S&P B+.

List of Primary Dealers

The list of dealers authorized by BoZ is as follows:

Documents & Resources

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