Across Southern Africa, governments are being forced to make impossible choices. As debt repayments rise and crises multiply, money meant for schools, hospitals and social protection is being squeezed, often with devastating consequences for ordinary people.
Two Oxfam supported studies from Malawi and Mozambique reveal how mounting debt, climate shocks and economic instability are reshaping public spending, leaving the poorest communities paying the highest price.


The reports, released in 2026, form part of a wider regional study examining how fiscal strategies and engagement with the International Monetary Fund (IMF) affect progress toward the Sustainable Development Goals. Their message is stark: ambitious development plans are repeatedly undermined by debt distress and recurring crises.


Malawi: big plans, little fiscal space
In Malawi, governments have set out bold visions, from Malawi 2063 to earlier national development strategies, aimed at ending poverty and building a resilient economy. But the report, Fiscal Strategies and Debt in Malawi, shows how those ambitions have collided with economic reality.


Over the past decade, Malawi has been hit by overlapping shocks: extreme weather events, the COVID 19 pandemic, soaring food and fuel prices linked to the war in Ukraine, and a persistent foreign exchange crisis. At the same time, public debt has climbed sharply, and debt service costs now absorb a growing share of government revenue.
As a result, after paying salaries and creditors, there is little left. Health and social protection budgets remain chronically underfunded and heavily dependent on donors, even as poverty and vulnerability rise. While education receives a larger slice of the budget, inefficiencies and inequality mean millions of children still struggle to complete school.


Mozambique: from ambition to austerity
Mozambique’s story is one of repeated shocks forcing painful trade offs. The report ‘From Aspirations to Reality’ tracks the country’s fiscal journey since 2015, a period marked by the hidden debt scandal, armed conflict in Cabo Delgado, devastating cyclones, the pandemic, and global price shocks.


Each crisis has narrowed fiscal space further. Although national plans are aligned with the Sustainable Development Goals and climate commitments on paper, the report finds a persistent gap between what is promised and what is actually spent. Debt servicing has increasingly crowded out public investment. Spending on health, education, agriculture and social protection has often fallen short of budgeted levels, while domestic borrowing at high interest rates has worsened the squeeze.


IMF supported programmes have brought tighter controls and some social spending safeguards, but these protections were limited. In practice, rising interest payments and weak budget execution, especially during periods of political instability, have left vital services underfunded. The human cost is clear: poverty remains stubbornly high, resilience to climate shocks is weak, and progress toward development goals is fragile.

Zambia: from debt crisis to a “survivalist” recovery

Zambia’s experience shows how quickly ambitious development plans can be derailed by unsustainable borrowing and external shocks. Initially aligned with Vision 2030 and the Sustainable Development Goals, the country pursued large-scale infrastructure investments financed through commercial debt, but this strategy contributed to rapid debt accumulation and eventually a sovereign default in 2020

Since then, Zambia has undergone a period of fiscal consolidation and reform. While the government has reduced its fiscal deficit, this has often come at a cost to social sector investment, with spending on health, education and agriculture constrained by rising debt service obligations. At the same time, shocks such as the COVID-19 pandemic and the 2024 drought have repeatedly disrupted recovery efforts and forced emergency reallocations of limited resources.

Engagement with the IMF has helped restore macroeconomic stability and introduced measures to protect social spending, including expanded social cash transfers. However, the report highlights that these safeguards have been limited in practice, as inflation, subsidy removals and fiscal pressures have eroded their real impact on households.

Overall, Zambia’s trajectory is described as a shift toward a “survivalist” development path, where debt servicing and fiscal constraints continue to crowd out long-term investment in public services. Despite reforms, the gap between policy ambition and actual service delivery remains significant, leaving many citizens vulnerable to ongoing economic and climate shocks.


A wider warning for the region

Together, the Malawi, Mozambique and Zambia studies highlight a regional pattern that cannot be ignored. Countries facing debt stress and frequent shocks are being pushed into short-term survival mode, prioritising debt repayment and crisis response over long-term investment in people.

For Oxfam, the findings strengthen the call for fairer and faster debt solutions, stronger protection for social spending, and fiscal policies that put people and climate resilience first. Without bold action, the reports warn, ambition will continue to fall short of reality, and inequality will continue to deepen.
 

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