Zambia’s domestic debt continued its upward trajectory in the third quarter of 2025, with the stock of debt contracted through Government securities rising to K252.8 billion, reflecting increased reliance on the domestic market to finance the budget deficit.
According to the latest Debt Statistical Bulletin, domestic debt increased by 4.16 percent to K252,801.01 million (US$10,604.87 million) at the end of the third quarter of 2025, up from K242,701.64 million (US$10,206.74 million) recorded at the end of the second quarter. The increase was in line with the programmed borrowing outlined in the 2025 Annual Borrowing Plan, which provides for domestic financing to support fiscal operations.
Government bonds dominated the domestic debt portfolio, with the 10-year bond accounting for the largest share at 21.99 percent of total outstanding domestic debt, valued at K55,587.24 million. This was followed by the 15-year Government bond, which accounted for 19.75 percent, amounting to K49,916.50 million. Treasury Bills made up a smaller portion of the portfolio, with the 91-day Treasury Bill accounting for the lowest share at just 0.63 percent, equivalent to K1,581.32 million.
By holder, Treasury Bills amounted to K50,194.44 million during the third quarter, representing 19.86 percent of total Central Government domestic debt. Commercial banks held the largest share of Treasury Bills at 48.49 percent, valued at K24,341.14 million, followed closely by pension funds at 45.67 percent, or K22,922.19 million. There were no Treasury Bill holdings by non-residents or the Bank of Zambia during the period under review.
Government bonds accounted for the bulk of domestic debt, totalling K202,606.57 million, or 80.14 percent of total domestic debt stock. Non-residents held the largest share of Government bonds at 30.20 percent, valued at K61,196.60 million. Among resident investors, pension funds held 23.94 percent, amounting to K48,511.16 million, while commercial banks accounted for 22.01 percent, valued at K44,592.73 million.
Yields on Government securities showed mixed movements during the quarter. The weighted average Treasury Bill yield rate increased by 0.46 percentage points to 13.88 percent, reflecting tighter liquidity conditions in the domestic market. In contrast, the weighted average Government bond coupon rate declined by 0.45 percentage points to 17.97 percent, suggesting easing pressure on long-term borrowing costs.
Looking ahead, domestic debt servicing pressures are expected to intensify. Maturities of Government securities held by residents are projected to peak in 2026 at K62,546.57 million, followed by K19,950.14 million in 2027. For non-residents, maturities are projected to peak in 2031 at K18,686.50 million, with a secondary peak in 2026 at K10,648.25 million.
Projected coupon payments on existing domestic debt rose sharply by 17.82 percent to K190,285.42 million by the end of the third quarter of 2025. Resident investors are expected to receive the highest coupon payments in 2026 at K20,064.66 million, while payments are projected to taper off significantly by 2040.
Discount payments on Treasury Bills and Government bonds are also expected to rise, with resident discount payments projected to peak in 2026 at K13,662.53 million. For non-residents, discount payments are projected to peak in 2031 at K9,868.55 million.
Overall, the rising domestic debt stock and mounting future debt service obligations highlight growing pressure on public finances, underscoring the need for continued fiscal consolidation and prudent debt management to safeguard macroeconomic stability.
