Zambia 2025

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Aggregate expenditure outturn was between 95% and 105% of the approved aggregate budgeted expenditure in at least two of the last three years. Between 2021 and 2023, government spending showed varying levels of adherence to the approved budget. In 2023, aggregate expenditure amounted to 96.8% of the approved budget, compared to 114.4% in 2021. This indicates a decrease in overspending over the period, potentially reflecting efforts to enhance fiscal discipline, including implementing the Public Debt Management Act, which introduced stronger oversight of debt contraction, improved debt transparency, and set clearer limits on borrowing to align fiscal policy with budgetary targets better.

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The variance in expenditure composition by administrative classification was higher than 15% in two of the last three years. By 2023, variances reduced significantly, reflecting better fiscal control.

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Variance in expenditure composition was higher than 15% in the last three years considered. Deviations were substantial during the early part of the assessment period due to reallocation for pandemic relief and debt servicing. In 2023, variances improved significantly, showing stronger fiscal discipline.

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Reliance on contingency reserves was minimal throughout the assessment period. Given the significant expenditure reallocations observed under PI-2.1 and PI-2.2, the limited use of the contingency reserve is mainly due to its modest size.

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Actual revenue outturn was 158.7%, 124.0% and 125.9% in the three years considered.

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Revenue composition variance remained high throughout the assessment period (i.e., 29.6%, 41.3%, 41.8%), driven by large deviations in the mining sector’s tax contributions and mineral royalties, and by unpredictable external factors such as fluctuations in copper prices. Non-tax revenues also saw unpredictable variations, resulting in consistent challenges in maintaining the approved revenue composition.

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The government budget and accounts use a classification system reflecting economic, functional, administrative and programme structure. This classification system is consistent with the IMF’s GFS Manual 2014 and COFOG up to the 2 digits level. The application of these classification across different budget cycle phases is not necessarily fully consistent. Budget formulation and reporting are based on administrative, economic and functional/sub-functional classification consistent with GFSM2014 and COFOG, as well as programmes/sub programmes. Budget execution is based on administrative, economic and programme classifications. Functional classification is not yet used during budget execution. Reporting on functional classification is done using mapping tables.

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Budget documentation fulfils 5 out of 12 elements: - 2 out of 4 basic elements, and - 3 out of 8 additional elements

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Based on the Report of the Auditor General on the Accounts of the Republic for the Financial Year 2023, amounts for expenditure outside financial reports are estimated to be less than 1% for the FY year 2023.

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Based on the Report of the Auditor General on the Accounts of the Republic for the Financial Year 2023, amounts for revenue outside financial reports are estimated to be less than 1% for the FY year 2023.

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Donor-funded projects must report quarterly or annually to their parent ministry, typically within 6 months of fiscal year end, but their expenditure percentage was not provided.

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The horizontal allocation for CDF transfers to local governments, which represent 77.3% of transfers, is transparent and rule-based. The LGEF, Grants in Lieu of Rates and transfers to CLDF are allocated based on defined rules but the criteria are not communicated transparently.

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Local governments receive timely information on transfers through the budget call circular, issued in line with the National Planning and Budgeting Act. The local authorities were allowed at least 4 weeks to complete their budget planning.

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Institutions align their strategic plans with national goals like Vision 2023 and the 8NDP. Performance objectives and outputs are integrated into the National Budget, with performance targets captured in the OBB system. While information on policy or programme objectives, KPIs, and output targets to be produced, is published annually in the Yellow Book, information on planned outcomes across most ministries is not updated and published annually.

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Annual information on quantity of outputs produced is published in the Yellow Book, and on some outcomes in the 8NDP’s annual performance review (APR) report. Budget performance reports prepared by the MPAs are not published, although some are submitted to the Parliament.

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While information on resources received by SDUs is available annually for at least one major sector (Education, with partial coverage in Health), the reporting does not comprehensively cover all sources of the funds received by SDUs such as own source revenues, external funds, in-kind contributions.

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Evaluations of service delivery performance have been conducted, covering sectors like Health, Education, Social Protection, and WASH. However, these evaluations are mostly led by cooperating partners and do not cover a material part of service delivery. The number of performance audits remains limited.

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The government makes budget information available for 3 out of the 5 basic elements and 2 out of the 4 additional elements in a timely manner.

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The monitoring of public corporations in Zambia is done by the Ministry of Finance, which receives financial statements from the largest public enterprises. However, reporting is not consistent across all public corporations, only 26 out of 49 (53%) of the public corporations submitted their audited financial statements after a year, and not all financial risks are systematically tracked.

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All local authorities publish their audited financial statements at least annually, but only 17% of local authorities publish them within nine months of the end of the FY. No consolidated report is prepared

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The Ministry of Finance provides partial reports on contingent liabilities, including government guarantees, but other fiscal risks such as public-private partnerships and environmental risks are not comprehensively reported. There is no evidence that material contingent liabilities are comprehensively identified or reported, making it difficult to assess the scale and potential budgetary impact of these risks.

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Economic analyses are performed on all (100%) major investment projects in line with national guidelines, with 40% of results published. Analyses are reviewed by entities separate from sponsors.

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Most projects are prioritized centrally, but PIM criteria are not consistently applied and inter-agency collaboration is weak.

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Capital costs are presented for budget year and MTEF, but no life-cycle or recurrent cost projections are included.

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Costs and physical progress are monitored by implementing agencies, but compliance is uneven and reporting is not systematic in government documents.

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The government maintains a register of its cash positions and holdings in major categories of financial assets. However, the information is presented without systematic indication of fair or market values.

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A register of government holdings of fixed assets is maintained under the Asset Management module in IFMIS with partial information on their usage and age. However, the information on assets is not comprehensive and not published.

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Procedures and rules for transfer and disposal of assets are in place. However, 2023 financial statements and public disclosures do not include the original purchase cost and disposal value of disposed assets, and no asset-specific records with both elements are available.

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Zambia's debt records are maintained to high standards, encompassing a comprehensive range of details such as loan face value, outstanding debt, disbursement flows, repayment flows, arrears, and loan terms. These records are supported by quarterly reports that provide a detailed view of the debt situation. However, the reconciliation of debt data is performed quarterly rather than monthly, which, while ensuring accuracy, does not meet the highest frequency standard required for an A score. As a result, this frequency of reconciliation corresponds to a B score for this dimension, reflecting strong but not optimal performance in terms of timeliness.

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The legislative framework provides clear authority for debt management, with a single responsible entity empowered to handle borrowing, issue new debt, and provide loan guarantees on behalf of the central government. This entity operates under well-documented policies and procedures, guiding the execution of debt-related transactions and the monitoring of debt management.

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The 2024-2026 MTDS has been published and includes comprehensive risk indicators covering interest rate, refinancing, and foreign currency risks. It incorporates a detailed comparison between the targets set in the previous 2023–2025 MTDS and the actual performance in 2023. Annual report is provided to the legislature.

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The government prepares forecasts of key macroeconomic indicators for the budget year and the two following years, but the forecasts on exchange rate and interest rate are not included in the budget documentation submitted to the National Assembly.

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The government prepares fiscal forecasts for aggregate expenditure and revenue and the budget balance and includes discussion on underlying explanatory factors. However, the assumptions are not explicitly discussed and the differences from the forecasts made in the previous year’s approved budget are not explained and published as part of the annual budget process.

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The government prepares macro-fiscal forecasts but the budget documentation for the last three completed FYs does not include a qualitative assessment of the impact of alternative macroeconomic assumptions and / or forecast sensitivities. The MoFNP analyses alternative fiscal scenarios and considers the impact of alternative macroeconomic assumptions. This analysis is internal, qualitative and not documented.

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The budget documentation includes estimates of fiscal impacts for the budget year only, not for the following two fiscal years. Estimates of fiscal impact are presented for “all” (i.e., more than 90% of the) new revenue policies and measures. The impact of new expenditure policy measures is not calculated for “all” proposed changes.

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The government prepares formal statements of fiscal objectives and targets in different documents which are submitted to the legislature (i.e., Green Paper and Budget Address). These objectives/targets are not necessarily consistent across documents and are not formulated as explicit time-based quantitative fiscal goals and targets for the two fiscal years following the budget year. The fiscal objectives are not always defined in “fiscal” terms, and represent a mix of qualitative and quantitative economic and fiscal goals for the budget year and/or medium-term.

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Budget performance against approved budget is discussed in several documents prepared by the government such as Budget Performance Report, Green Paper, Budget Speech, White Paper, Annual Economic Report. These documents report on the trends in the evolution of macroeconomic and fiscal indicators, and provide explanatory factors, but they do not provide an assessment of the achievements against its stated fiscal objectives and targets and do not explain the reasons for any deviations from the set objectives and targets, except for the White Paper which discusses the progress on the achievements of macroeconomic and fiscal objectives to some extent, but is not submitted to the legislature. None of the documents include proposals for addressing deviations.

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The annual budget presents estimates for the budget year and the following two fiscal years for economic and programme/functional classifications, even though information on economic allocations is not consolidated at the high level of economic classification. Estimates by administrative classification are usually also provided, but for the 2024-2026 Budget estimates by administrative classification were provided only for the budget year.

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Aggregate expenditure ceilings for the medium term are approved by the government through Green Paper before the issue of the budget call Circular. The ministry-level medium-term ceilings for the period assessed are provided in the Budget Call Circular, after the approval of the Green Paper, but these were not approved by the Cabinet.

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Medium-term strategic plans are prepared for most of ministries (>75%). Only some strategic plans (25%-50%) are fully costed. Some (25%-50%) expenditure policy proposals align with the strategic plans.

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Medium term estimates at the ministry level were not included in the 2024 budget documents (PI-16.2). Comparison between medium-term budgets can be done at the aggregate level only. The variations between the second year of the last medium-term budget (2023-2025) and the first year of the current medium term budget (2024-2026) at the aggregate level are not explained and quantified explicitly and comprehensively even some trend analysis and explanatory factors are provided.

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A clear budget calendar exists. Being statutory envisaged, the majority of actions are adhered to and completed within recommended time. The MPAs are given four weeks to complete their budget submissions. Although there are indications that this time is not sufficient and there are MPAs which present their budget submissions with delay, most of the MPAs meet this deadline.

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The Budget Call Circular issued to MPAs for the 2024 Budget is clear and comprehensive. It provides indicative resource ceilings for each MPA covering total budget expenditure for the budget year and the following two fiscal years. The ministerial ceiling included in the Budget Call Circular are not approved by the cabinet. The cabinet reviews and approves the budget estimates after they have been completed in every detail.

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The executive has submitted the annual budget proposal to the legislature at least one month before the start of the fiscal year in each of the last three years (i.e., three months in advance for the 2024 and 2023 Budgets, and two months – for 2022 Budget).

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The National Assembly reviewed fiscal policies, medium term fiscal forecasts, medium term priorities, aggregate expenditure and revenue as well as details of revenue and expenditure in compliance with the legislation.

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The National Assembly has well established procedures for scrutiny of the budget, which are adhered to. The procedures include internal organizational arrangements including specialized review committees such as the Planning and Budgeting Committee, the participation of the portfolio committees prior to the discussions in the House and the technical support of the Parliamentary Budget Office (PBO) to committees in charge of the prior review, as well as consultations with relevant government stakeholders and public consultation.

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During the last three fiscal years the National Assembly approved the annual budget before the start of the fiscal year in each of the last three years.

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The rules for in-year budget adjustments by the executive are clear but no strict limits for the magnitude of reallocations are set. The Secretary of Treasury has substantial discretionary power to act within the set rules.

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ZRA administers more than 86.5% of all domestic revenues and provides easy access to a broad range of general and specific information to taxpayers on all types of revenue and all types of obligations.

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ZRA established a formal approach for compliance risk management with clearly documented procedures and guidance in the “Compliance Risk Management Framework”. The approach is “comprehensive” in that it covers all categories of revenue collected by ZRA, but it is not fully operationalized yet and not implemented in a systematic manner.

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ZRA undertakes audits and fraud investigations using a general Compliance Improvement Plan (covering all types of taxes) and audit strategies for direct and indirect taxes. A post-clearance compliance audit plan for Customs has not been set-up yet. A compliance plan for investigations is not in place yet. There is no dedicated reporting on the implementation of audit strategies and respective targets, although information on conducted audits is included in the ZRA’s annual report and individual Divisions’ monthly revenue performance reports.

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The stock of revenue arrears managed only by ZRA is estimated at about 68% of total revenue collected by ZRA in 2023. The revenue arrears older than 12 months represent about 83.2% for domestic taxes and 67.7% for customs.

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Ministry of Finance receives revenue returns from entities collecting most of central government revenue (i.e. more than 75% but less than 90%) at least on a monthly basis and consolidates the information into a consolidated report.

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ZRA collect “most” of central government revenue and transfers collections to the Treasury on a daily basis. Non-tax revenue collections are transferred at least twice a week.

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Reconciliations conducted by ZRA, which collect most of the domestic revenue is not compete and/or adequately documented. Reconciliations conducted by ZRA, which collect most of the domestic revenue, is not compete. Reconciliation of assessments and arrears are not undertaken and/or are not adequately documented. The reconciliations of collections with transfers to the Treasury are conducted on a quarterly and annual basis and are completed within 2 and 3 months correspondingly.

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While the TSA system covers most core accounts at the Bank of Zambia, a significant share of cash balances remains outside Treasury oversight. Due to incomplete evidence on the materiality of balances consolidated by value, a higher score cannot be substantiated.

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MPAs submit quarterly cash needs and adjust IFMIS profiles. The system regularly prepares and updates annual cash flow forecasts, revenue forecasts, and expenditure forecasts, despite coordination and execution issues.

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MPAs are provided with information on commitment ceilings at the beginning of each quarter based on their spending profiles for the period, but the information is not reliable and adjustments can happen based on weekly cash rationing leading to budget constraint decisions.

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Significant and frequent adjustments to the budget are carried out annually in accordance with the PFM Act, within programmes and with MoFNP ST prior approval.

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The stock of expenditure arrears remained at over 10% of the total expenditures during the three-year period. The MoFNP developed the 2022 – 2026 DDAS which is being implemented since 2022. The DDAS is aimed at clearing legacy arrears through a multi-year plan and through a central budget allocation under the Ministry of Finance and National Planning irrespective of which MPA accrued the arrears.

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The Controller of Internal Audit verifies and validates the arrears on a quarterly basis. The annual audited financial reports include Appendix 15 status of all outstanding commitments and the new accrued arrears for the period.

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The payroll and personnel records are maintained separately, with periodic reconciliation. Integration is not automated, and updates can be delayed due to inefficiencies and weak internal controls.

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Changes to payroll were controlled and authorized properly, with supporting documentation. However, delayed updates to payroll records for separated or deceased employees, as highlighted by OAG reports, demonstrate inefficiencies in managing payroll changes.

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The payroll process is adequately controlled and maintains critical data integrity through formal authorizations and amendment records. Although weaknesses like ineligible allowances and duplicate entries were noted by the Office of the Auditor General, these issues are not widespread and do not significantly affect payroll for most staff.

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Payroll audits were conducted periodically by OAG and CIA, revealing some inconsistencies in allocation of positions and update on benefits such as leave and overtime payments, some of which can be resolved.

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Despite a number of challenges, procuring entities are broadly compliant in recording basic procurement information and data are accurate and complete for the majority of procurement methods for goods, services and works.

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For the majority of the total procurement value, 76.9% was awarded through competitive methods within the e-GP system but the remaining contracts were likely not awarded through such methods.

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Three key elements are accessible, including legal and regulatory frameworks, annual procurement plans, and published tender notices. Contract award details on the e-GP System are also available, but often lack values.

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The procurement complaints management system is independent and accessible, with a defined process for submission and resolution. The Zambia Public Procurement Authority (ZPPA) has the authority to suspend procurement processes, and decisions are timely and binding. The system meets five out of six criteria: a fee is charged for lodging complaints.

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While segregation of duties is structurally sound and automated through IFMIS in most of the central government, incomplete coverage at lower levels prevents full compliance.

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The legal provisions and control systems are in place, but their practical application remains partial. Commitment control procedures are in place, but their coverage is partial and their effectiveness is limited.

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The MoFNP permits exceptions when justified, and most exceptions are recorded in audit trail entries. The 2023 financial year showed mostly compliant payment practices, but there is no consolidated quantitative figure showing irregular payments' share of total CG expenditure, limiting compliance to a majority of payments.

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The internal audit function in MPAs is established, legal, and centralized, but lack of data on coverage for all CG entities, including EBUs, hinders the highest possible score.

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According to the 2023 CIA Annual Report, internal audit activities are focused more on evaluating the adequacy and effectiveness of internal controls than on compliance and financial audits.

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Internal audit implementation is ongoing in central government MPAs and donor-funded EBUs, with the majority of audits completed despite resource constraints and system limitations.

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The CIA annual reporting show that management only provides responses but there is limited follow up to internal audit findings and recommendations.

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Despite the legal framework and formal procedures, the low level of compliance and oversight over MPA-held accounts means that bank account reconciliation remains incomplete. The reconciliation process is fragmented with full compliance only at the central Treasury level.

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Most suspense accounts are reconciled annually, usually within two months after the fiscal year ends, and are cleared in financial statements by year-end, with some daily operational reconciliations.

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Legal provisions mandate monthly reconciliation of advance accounts, but in practice, reconciliation is performed annually, with clearance timelines varying. Cash basis accounting for travel advances limits reporting.

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IFMIS offers a structured framework for financial data integrity, but weaknesses in end-period controls, open transactions, subnational rollout, and manual processes undermine data quality, despite the system features, audit trails, and role-based controls.

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In-year reporting remains limited to aggregated execution data at MPA level, with no presentation of performance outputs or disaggregated sub-program performance.

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Financial reports are prepared quarterly and issued within 4 weeks from the end of each quarter but the 4th quarterly report is only captured in the annual financial report produced in March of the following year.

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In-year budget reports are produced at payment stage under the cash-based IFMIS. Despite system-enabled reporting, but in-year report accuracy remains moderate. Nevertheless, overall budget data is useful for budget execution analysis.

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While the annual financial reports are comparable to the budget and include information on revenue, expenditure and cash balances, they lack key components such as liability and guarantee disclosures, long-term obligations and variance reporting.

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The submission of the last 2023 annual financial report to the Auditor-General was made within the prescribed 3 months after the end of the fiscal year, and same for the last three years.

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The 2023 Financial Report of Zambia confirms its compliance with IPSAS, specifically Part 1, with limited elements of Part 2 adopted. The reports disclose the standards used in annual financial reporting, but do not explain variations between international and national standards.

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The OAG audits all CG entities and ensure 100% coverage of revenue, expenditure, assets, and liabilities based on risk-based audit plans (and sampling). Audits are conducted in accordance with the International Standards of Supreme Audit Institutions (ISSAIs), as outlined in the Audit Manuals of the African Organization of Supreme Audit Institutions (AFROSAI-E). The audit reports highlight material issues, systemic and internal control matters e.g., weaknesses in procurement system, payroll, IFMIS, etc.

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The audit reports for government accounts and parastatal bodies and statutory institutions (which include EBUs and SSFs) are prepared separately. The government accounts are received in March, the OAG issues an opinion in May, but the complete audit report is submitted to the Legislature in September; this implies a six-month period from receipt to submission. The accounts of EBUs and SSFs are received by the OAG in March, and the final audit report is submitted to the Legislature in December; this implies a nine-month timeframe from receipt to submission.

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The follow-up on OAG recommendations of the main audit report is an integral part of the audit process for the subsequent year. The audit reports include an appendix (i.e., status report) that outlines issues from previous financial years that have not been fully resolved. This status report is prepared based on the Action Taken Report (ATR), which represents the formal and comprehensive response of the executive (or audited entity) to the PAC recommendations. The status report includes unresolved recommendations which date back from 2009; this reflects that the follow-up process is not timely and effective, as unresolved issues keep piling up and repeated. The ATR for 2021 and 2022 have not been completed yet.

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The OAG operates independently from the executive with respect to planning of audit engagement and has unrestricted access to information. The appointment of the head of the OAG remains largely dependent on the Executive as the independent body (State Audit Commission) was not yet operational. The Office lacks independence in approving and executing its budget.

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The scrutiny of audit reports by the PAC has been completed (i.e., laid on the table of the House) within ten months (for the report on MPAs) and seven months (for the report on EBU/SSFs) since their submission by the OAG during the last three completed financial years i.e., 2021, 2022 and 2023.

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PAC and CPB hold in-depth hearings on key findings of audit reports regularly with responsible officers from all audited entities which are citied in the audit reports. Hearings include always a representative from the Office of the Auditor General.

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The legislative issues recommendations on actions to be implemented by the executive and follows-up on their implementation, even though, given the number of unresolved recommendations and repeated matters, the follow-up is not effective. There was no follow-up on the recommendations on 2020 and 2021 audit reports as the Action Taken Reports are yet to be presented.

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All hearing were conducted in public. There were no exceptions during the years under examination even though exceptions are permitted in strictly limited circumstances (e.g., on matters related to defense). Hearings are broadcasted on radio and TV, and proceedings of the hearings are published. Committee reports were debated in full chamber and published on the National Assembly website.