Recently, the parliament approved Finance Minister Alexander Chikwanda’s proposal to raise the debt ceiling from 60 billion Zambian Kwacha to 160 billion Kwacha.

debtBut the move has raised eyebrows, with analysts charging that this will worsen economic challenges the country is passing through.

The Civil Society for Poverty Reduction, a local social and economic lobby group, described the move as an economic sabotage and that it may worsen the current debt situation.

But the government has defended the decision saying the current debt situation is not bad as it is about 38 percent of Gross Domestic Product (GDP) and much lower than the country’s GDP which stands at 26 billion U.S. dollars.

The Zambian finance minister said in a statement that it was ironical to compare the current situation to 2005 when the country qualified for the Highly Indebted Poor Countries (HIPC) relief as the GDP then was 6 billion U.S. dollars against the external debt of 7 billion U.S. dollars.

According to him, the budget deficits the country is facing are not only a result of inadequate inflows, but also related to the need for quicker development pace against the backdrop of huge development arrears.

“The discussion should center on the use of borrowed money particularly on whether the money is on growth promoting projects which enhance our productive capacities and hence sustainable means and ability to service debt obligations,” he added.

Zambia’s current external debt stock stands at around 6.4 billion U.S. dollars as of November last year, according to central bank figures. Enditem

Source: Xinhua


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