Zambia : MoF Launches 2027

Secretary to Treasury Felix Nkulukusa has said strengthening domestic revenue mobilisation is critical to preventing a return to debt distress while creating fiscal space to finance public services and national development.

Mr Nkulukusa was speaking today, at the launch of public consultations on the 2027–2031 Medium-Term Revenue Strategy (MTRS), under the theme: Mobilising Domestic Resources for Sustainable Growth and National Development.

He noted that the 2027–2031 MTRS, is not a tax-increase exercise, but an effort to create a broader, fairer and more predictable revenue system to support Zambia’s development.

He explained that the government wants to improve tax compliance, address tax avoidance and evasion, simplify the tax system and ensure that all sectors contribute their fair share.

Mr Nkulukusa disclosed that, government has over the years provided tax incentives and relief to priority sectors, with tax expenditure in 2023 and 2024 amounting to between 1.5 and 2 percent of the Gross Domestic Product (GDP).

The Secretary to Treasury, however, expressed concern over low tax compliance, smuggling and tax avoidance, saying these challenges have contributed to Zambia’s sluggish Revenue-to-GDP ratio.

He said increased compliance could create room for the government to consider reducing some tax rates while still increasing overall revenue collection.

“Zambia can no longer rely on excessive borrowing to finance development, particularly following the country’s debt restructuring, which requires strong and predictable domestic resource mobilisation,” he added.

He also said the success of the MTRS, will depend on building greater trust between government, taxpayers, businesses and citizens.

Mr Nkulukusa has since called on the private sector, professional bodies, civil society and other stakeholders to submit evidence-based and actionable proposals to help shape the strategy.

Speaking at the same event, the Ministry of Finance and National Planning Permanent Secretary for Budget and Economic Affairs, Mwaka Mukubesa said Zambia’s improved economic stability must now be matched with stronger domestic resource mobilisation to support sustainable economic growth and national development.

Ms Mukubesa noted that Zambia has made significant progress in stabilising the economy.

She cited progress in debt restructuring, fiscal consolidation, foreign exchange reserves and inflation.

“The external debt restructuring process is now more than 94 percent complete, while the fiscal deficit had declined to 3.4 percent by October 2025, from about nine percent in 2021,” she added.

And the Budget Office Director under the said Ministry, Willies Chipango, charged that the government has set a target of increasing domestic revenue collection by between two and four percentage points of GDP over the next five years, under the 2027 – 2031 MTRS.

Mr Chipango said the target is aimed at narrowing the gap between government expenditure and revenue, while strengthening Zambia’s fiscal position.

“Zambia collected about 22.2 percent of GDP in revenue in 2025, against expenditure of about 26 percent of GDP, hence, the government therefore wants to narrow the gap between revenue and expenditure to less than two percent of GDP between 2027 and 2029,” said Mr Chipango.

Meanwhile, Zambia Revenue Authority (ZRA) Commissioner General, Dingani Banda has identified low tax compliance, as the biggest challenge undermining domestic resource mobilisation, with significant gaps recorded across major tax categories.

Mr Banda pointed out that improving compliance could help Zambia raise additional revenue without necessarily increasing tax rates.

“ZRA’s data shows an overall tax return filing compliance rate of about 52 percent between January and July 2026, up from 49 percent recorded in 2025. Compliance remains low across taxpayer categories, with SMEs at about 49 percent, the specialised tax office covering the mining sector at 62 percent and large taxpayers at 68 percent,” said Mr Banda.

He disclosed that if compliance improves to about 74.8 percent, annual revenue could reach approximately K186.6 billion, exceeding the projected target of K169.6 billion, adding that further improvement to about 81.6 percent could push collections to more than K203 billion.

The Commissioner General also said ZRA is therefore implementing Compliance Risk Management, using data to identify taxpayer risk profiles and tailor interventions accordingly.

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