Zambia’s cabinet approved a 8 billion kwacha ($439 million) economic stimulus package financed through a COVID-19 bond in an effort to alleviate the pandemic’s impact, the presidency said on Tuesday.
Zambia, Africa’s second largest copper producer, has been struggling with growing public debt even before the coronavirus outbreak forced lockdowns across the globe, crippling international demand for raw materials.
Zambia has reported 1,416 confirmed coronavirus cases and 11 deaths so far.
“Cabinet resolved that it is necessary to provide an economic stimulus through the issuance of the COVID-19 bond in order to improve liquidity levels in the economy,” it said.
The proceeds from the bond will go towards needy areas, including payment of retirees, contractors and suppliers, which have been hit by reduced liquidity due to COVID-19, the presidency said.
Zambia’s budgeted revenue is estimated to fall short of target by close to 20% as a result of economic adjustments due to COVID-19, the finance ministry said in April.
The central bank projected in May gross domestic product (GDP) would shrink 2.6% in 2020, its first economic contraction in more than 20 years.