A leading charity has called for Zambia to be given the benefit of the doubt as allegations of corruption and uncontrolled spending threaten to plunge the country into crisis.

Fraud allegations that led to the suspension of the UK’s aid funding to Zambia and the sacking of a key minister could deepen Zambia’s precarious financial position as further details of President Edgar Lungu’s government overspending is revealed.

Speaking to ZNBC news in Lusaka, Misheck Kombe, of Zambia-based Vision Ambassadors, appealed to aid providers including DfID to rescind their decision to freeze payments to the country, saying it would hurt the poorest in society. He said donors should judge Zambia leniently, especially as Lungu and his government have shown commitment to recover the money.

In a report, the newsletter Africa Confidential has documented allegations of systematic misappropriation of aid that could plunge Zambia into a spiralling debt crisis and risk investor confidence in the government. It questioned the country’s financial stability and claimed that Lungu was aware of claims over payments of social cash transfers six months ago, but failed to act until now.

Three government departments – education, health and community development – are now the subject of inquiries. At the Ministry of Education, claims of a multi-million-dollar fraud are being investigated in connection with internal payments and procurements systems.

In health, it is alleged that vast quantities of drugs have gone missing from warehouses and officials have been involved in the purchase of fake pharmaceuticals, while up to $4.7m (£3.6m) is claimed to have been misappropriated from the Ministry of Community Development and Social Services. The ministry’s Emerine Kabanshi was sacked last week by Lungu, who said he wanted “a speedy and decisive investigation”.

As well as alleged corruption, the country’s financial problems relate to overspending and a number of highly priced loans secured by the government, including two military transport aircraft for more than $95m from an Italian arms manufacturer, and provisional loans for the purchase of Israeli defence electronics worth $500m.

In June, the Zambian government pledged to cut public spending and stop new borrowing. But foreign debt currently stands at an estimated $9.4bn, a doubling since 2014, and the country’s ministers are keen to get the International Monetary Fund to resume talks over a potential $1.3bn bailout.

DfID told the Guardian they were involved in a joint investigation with the Zambian government relating to the education, social cash transfers and health payments. They confirmed their commitment to poor communities in Zambia, but pointed to their track record in retrieving funds in cases of financial misuse and fraud.