Zambia’s finance minister asked parliament on Friday 6 November 2026 to approve a budget of K284.8 billion, in Zambian kwacha (about US$14.5 billion), for 2027. The plan leans on higher taxes to shrink a deficit that overshot its target.
Dr Situmbeko Musokotwane, the Minister of Finance and National Planning, told the National Assembly, Zambia’s parliament, in Lusaka that new measures would raise about K10.8 billion (about US$550 million) from 1 January 2027. Zambia is Africa’s second-largest copper producer and defaulted on its foreign debt in 2020, so investors and metal buyers in the United States are watching closely.
What the Budget Asks of Taxpayers
Value-added tax (VAT), the sales tax on most goods and services, would rise to 16.5% from 16%. The speech adds that corporate income tax would go up by 5 percentage points on all income now taxed at 20% or below.
A new top rate of pay-as-you-earn (PAYE) income tax, 39.5%, would apply to income above a monthly threshold. The speech sets that threshold at K37,000 (about US$1,880) a month, while the annex, the attached list of revenue measures, says K34,000, so the two documents differ.
Only the slice of pay above the threshold would be taxed at 39.5%. Workers earning K37,000 a month or less would not be affected, according to the speech.
A new excise duty, a tax on specific goods, would be K1 per kilogram of sugar (about US$0.05) and 20% on chocolate and sugar confectionery. Customs duty, a tax on imports, on ceramic tiles would rise to 40%, although the documents give different old rates.
Mining would pay more too, with a 15% tax withheld on dividends paid by mining companies, up from 0%, and a 5% export duty on zinc concentrates. Mobile money levies, passport fees and residence and work permit fees would also rise.
A fountain and office towers in central Lusaka, the capital of Zambia, pictured in December 2013. Photo: Matthew Grollnek / Wikimedia Commons (CC BY-SA 4.0)Where the Money Goes
Spending of K284.8 billion would equal 28.4% of gross domestic product (GDP), the value of everything the economy produces. The conversions here use US$1 = K19.69, the 6 November 2026 close.
Domestic revenue would cover K233.7 billion (about US$11.9 billion), or 82.1% of the budget. Borrowing would fill K41.9 billion (about US$2.1 billion), or 14.7%, and grants from cooperating partners, meaning foreign donors, would add 3.2%.
Education would get K38.2 billion (about US$1.9 billion), or 13.4% of the budget. Health would get K30.3 billion (about US$1.5 billion), and the plan recruits 3,125 frontline medical personnel in 2027.
Debt service, the cost of interest and repayments, would take K67.6 billion (about US$3.4 billion), mostly owed to domestic lenders. The Constituency Development Fund, money each constituency receives for local projects, would get K9.05 billion (about US$460 million).
The Economy Behind the Numbers
The minister said inflation was 6.3% in October, down from 11.2% in December 2025. The Bank of Zambia, the central bank, cut its policy rate, the benchmark lending rate, to 10.75% in September from 14.25% in December 2025.
Copper reached a record US$14,850 a tonne in August, but crude oil spiked to US$114 a barrel in October from US$64.6 in January, which lifted fuel prices. Moody’s, a credit rating agency, upgraded Zambia to Caa1, a very high credit risk grade, on 30 October 2026.
For 2027 the government targets growth of at least 4.9% and inflation inside a 6% to 8% band. It also wants the deficit at 3.0% of GDP, against a projected 5.9% this year and an original 2026 target of 2.1%.
Real GDP growth averaged 7.4% in the first half of 2026. Gross reserves, the foreign currency the central bank holds, stood at US$6.1 billion at the end of August, and the plan aims to keep them above four months of import cover, meaning enough to pay for four months of imports.
What It Means for You
Households would pay more for many everyday items if VAT and the new excise duties pass, though only higher earners face the 39.5% band. Travellers and foreign workers should note that passport and residence permit fees are among the proposed increases.
Investors in mining would see a 15% dividend withholding tax and a zinc export duty, which could change payouts and project returns. US businesses selling into Zambia should watch the mobile money levy, the tile duty and the appliance change, since energy-saving appliances would lose their VAT zero-rating.
The budget also aims to cut the deficit to 1.2% of GDP by 2029, which would ease pressure on borrowing. Readers should treat every figure as a proposal until parliament votes.
What Happens Next
The proposals now go to the National Assembly, and the government is expected to turn them into a Finance Bill, the law that sets tax changes. The speech does not say when parliament will vote, so the timing of final approval is open.
What Is Not Known
Frequently Asked Questions
When would Zambia’s new taxes start?
The proposed revenue measures would take effect on 1 January 2027. They need approval from parliament first.
Who would pay the 39.5% income tax rate?
Only income above the monthly threshold would be taxed at 39.5%. The speech sets that threshold at K37,000 (about US$1,880), while the annex says K34,000.
How much would Zambia borrow in 2027?
The budget plans borrowing of K41.9 billion (about US$2.1 billion), or 14.7% of spending. Domestic revenue of K233.7 billion (about US$11.9 billion) would cover most of the rest.
Sources: Ministry of Finance and National Planning of Zambia, 2027 Budget Address and annex of proposed revenue measures, delivered to the National Assembly 6 November 2026 (https://www.parliament.gov.zm/sites/default/files/images/publication_docs/Budget%20Speech%20for%202027%20Final.pdf); exchange rate: 6 November 2026 market close.
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