Zambia delays borrowing plans indefinitely

Zambia has decided to delay all planned borrowing indefinitely, its finance minister said on Thursday, slowing down the accumulation of new debt amid worries about the risk of distress.

“The debt sustainability analysis has confirmed that we need to undertake measures to bring debt risk to moderate from the current high risk,” Margaret Mwanakatwe told a news conference in the capital Lusaka.

The International Monetary Fund rejected Zambia’s borrowing plans in February, saying they risked making its debt load harder to sustain. The new debt management plan could now clear the way for Zambia to agree a $1.3 billion loan agreement with the IMF.

The southern African country’s debt pile stood at $9.3 billion, or roughly a third of gross domestic product, at the end of March, up from $8.7 billion at the end of 2017, Mwanakatwe said.

Because of continued spending pressures relative to expected revenue, the fiscal deficit for 2018 is likely to be higher than the 6.1 percent projected in the budget, she said.

REUTERS