Zambia 2025
Executive summary
Purpose and Management
This Public Expenditure and Financial Accountability (PEFA) assessment for Zambia provides a comprehensive overview of the performance of the country’s public financial management (PFM) systems as of the end of the 2023 fiscal year. The assessment was undertaken as part of Zambia’s ongoing commitment to strengthen financial governance, fiscal transparency, and accountability in the management of public resources. It is embedded within the broader framework of Zambia’s approach for PFM reforms and serves to assess the strengths and weaknesses of existing systems and inform the update of the PFM Reform Strategy 2024-2027.
The findings are also intended to support dialogue with development partners and reinforce Zambia's adherence to global standards of fiscal responsibility.
The assessment was conducted as a joint assessment. The Ministry of Finance and National Planning (MoFNP) led and coordinated the assessment, supported by a multidisciplinary team that included representatives from the Zambia Revenue Authority (ZRA), Office of the Auditor General (OAG), Controller of Internal Audit (CIA), the Zambia Public Procurement Authority (ZPPA), and selected line ministries. Technical assistance was provided by external consultants funded by the European Union. The assessment applied the PEFA 2016 framework and relied on a combination of documentary review, system walkthroughs, and consultations with public officials at both central and subnational levels.
Main Strengths and Weaknesses of the PFM Systems
Main strengths
Zambia maintains sound control over aggregate public spending. Overall actual expenditures have remained close to the approved budget in recent years, reflecting improved fiscal oversight, use of the Treasury Single Account (TSA), and more consistent enforcement of spending limits.
Debt management practices are well-structured and rules-based. Public debt is governed by a clear legal framework, debt records are complete and accurate, and borrowing is guided by a published Medium-Term Debt Strategy (MTDS).
Legislative budget scrutiny is comprehensive and timely. Parliament receives the full set of budget documents, follows an established review calendar, and deliberates through active portfolio committees with support from the Parliamentary Budget Office.
Annual financial reports are submitted within legal deadlines. The Accountant General has met statutory submission timelines, supporting the audit process and strengthening fiscal transparency.
External audit coverage is comprehensive and in line with international standards. The Office of the Auditor General (OAG) audits all central government entities and applies a risk-based audit approach with increasing emphasis on systemic control issues.
Main weaknesses
Zambia’s PFM system IFMIS continues to face key weaknesses. Budget execution is affected by high in-year reallocations, late issuance of commitment ceilings, and recurring arrears, all of which undermine budget reliability at a detailed level.
Revenue forecasting remains inaccurate and overly reliant on volatile sources. Budget forecasts regularly underestimate revenue collections due to windfall gains from mineral royalties and other one-off items, weakening the credibility of fiscal planning.
Procurement lacks transparency and competitiveness. Less than 50 percent of procurement is conducted through open competition, and public disclosure of procurement information remains limited, contributing to inefficiencies and fiduciary risk.
The absence of a credible medium-term expenditure framework limits strategic planning. Ceilings are not consistently used, sector plans are not costed, and fiscal strategy is not formally published or monitored according to international good practices.
Public investment and asset management processes continue to face substantial weaknesses. While some legal provisions for public investment management exist, only a portion of major projects are fully appraised and costed. Formal selection criteria are inconsistently applied, and monitoring of implementation is fragmented. The national asset register is incomplete and poorly integrated with financial reporting systems.
Impact of PFM Performance on Budgetary and Fiscal Outcomes
Aggregate fiscal discipline has improved but remains vulnerable. While aggregate expenditure control has strengthened, the government’s ability to manage the budget within approved ceilings is weakened by poor cash forecasting, delayed ceilings, and weak control of arrears. Dependence on unpredictable revenue sources - especially from copper – creates planning risks that could compromise fiscal targets under Zambia’s IMF-supported fiscal consolidation programme.
Strategic resource allocation is undermined by the lack of medium-term planning and credible costing. Despite a clear and participatory budget calendar, the absence of a consolidated fiscal strategy, weak alignment between sector plans and budgets, and poor investment selection processes limit the government’s capacity to prioritize spending in line with policy objectives.
These weaknesses are particularly relevant as Zambia seeks to expand infrastructure and social sector investment under the 8th National Development Plan.
Service delivery is constrained by inefficient execution processes and weak performance monitoring. Delays in procurement, limited competitive bidding, and late communication of budget ceilings to service delivery units affect the availability and efficiency of public services. While output indicators are increasingly reported, outcome monitoring is rare and linkages to budget decisions remain weak.
Performance Changes Since the Previous PEFA Assessment (2017)
The PEFA 2023 assessment reveals a mixture of progress and ongoing challenges compared to the 2017 assessment. The drop in many scores since the previous assessment may not do justice to the reforms achievements that the authorities have worked hard on over the last years as they cannot be compared. The drop of the scores across some indicators may be explained by a less strict application of the PEFA 2016 framework particularly with respect to the materiality of performance and calibration of performance against each individual requirement as per PEFA framework.
Overall, while Zambia has made notable institutional and procedural improvements, especially in legal reforms, reporting, and financial system integration, the persistent issues of execution, compliance, and enforcement continue to limit the translation of these reforms into better fiscal outcomes and more effective service delivery.
Since the 2016 PEFA assessment, Zambia has strengthened the legal and procedural foundations of its PFM system but has not fully translated these improvements into more effective execution, transparency, or service delivery. Several core weaknesses identified in 2016 - particularly in forecasting, investment planning, procurement, and reporting - remain largely unaddressed.
Zambia has achieved improvements in key PFM areas, particularly in expenditure control, debt management, and legislative scrutiny. Aggregate expenditure outturns are now more consistent with the budget, reflecting stronger control systems and enforcement.
Public debt management has seen significant reform, including the introduction of a debt law, regular publication of an MTDS, and reliable debt reporting.
Transparency in public financial information has expanded in terms of coverage, but the quality of budget documentation has declined. Key elements such as previous outturns, fiscal risks, and tax expenditures are still not systematically presented. Procurement performance has deteriorated, with less than 50% of contracts awarded through open competitive methods and limited publication of procurement information, undermining efficiency and transparency.
Progress in medium-term and policy-based budgeting remains limited. The Medium-Term Expenditure Framework is still not credible, ceilings are not consistently used, and the fiscal strategy is not formalized. Despite improvements in the structure of the annual budget process, these shortcomings constrain the link between national development priorities and resource allocation.
While the timely submission of annual financial reports has been sustained, in-year reporting remains weak. Reports are delayed, not fully aligned with approved budget structures, and do not include performance information. Reconciliation processes for bank accounts, advances, and suspense accounts remain problematic, affecting the reliability of financial data.
External audit quality remains high, with continued compliance with international standards and risk-based coverage of all central government entities. However, institutional follow-up remains weak. The Ministry of Finance has not issued Action Taken Reports for recent audits, and many recommendations remain unimplemented, limiting the effectiveness of the oversight process.
