Key facts
- Zambia's Q1 fiscal deficit was ZMW 16.9 billion, 1.83% of GDP.
- Revenue and grants reached only 19.6% of the annual plan.
- VAT collections were particularly weak at 14.5% of the annual target.
- Transfers and subsidies accounted for 39.2% of the full-year budget.
- Domestic financing utilized 79.2% of the annual target by Q1.
- Zambia's election year fiscal deficit target is 2.1%.
Zambia recorded a fiscal deficit of ZMW 16.9 billion in the first quarter, equivalent to 1.83% of its Gross Domestic Product (GDP). This shortfall occurred as revenue and grants only reached 19.6% of the annual plan, with Value Added Tax (VAT) collections particularly weak at 14.5% of the budgeted amount. Expenditure outpaced revenue, with transfers and subsidies consuming 39.2% of the full-year budget. The government's reliance on domestic financing has already seen 79.2% of the annual target utilized by the end of Q1, exacerbated by the absence of external program disbursements. The country is operating under a tight fiscal deficit policy target of 2.1% for the election year. Concurrently, domestic debt increased by 6.47% quarter-on-quarter to ZMW 270.15 billion by the end of Q1, consistent with the annual borrowing plan for deficit financing. The 10-Year Government Bond held the largest share of this domestic debt. Central government external debt rose to USD 16.32 billion by end-March, driven by multilateral disbursements and restructuring flows. Total public-sector debt stands at USD 31.82 billion, or 65.8% of GDP, with arrears totaling USD 8.09 billion.