Zambia’s newly appointed Finance Minister, Bwalya Ng’andu recently announced that there has been an increase in both Zambia’s domestic and external debt and the country needs to step up its implementation of the austerity measures in order to stabilize the economy.
According to him the external debt of the country has increased from $10.18 billion as at end of March to $10.23 billion at end June 2019 while the domestic debt increased from K58.3 billion ($4.6 billion) to K60.3 billion ($4.8 billion). Ng’andu who was appointed by President Edgar Lungu on Sunday to replace Margaret Mwanakatwe made this known while speaking at the second quarter briefing on the performance of the economy.
“Arrears stood at K16.7 billion ($1.33 billion) at as end March 2019, up from K15.6 billion ($1.24 billion) as at December 2018. The increase in arrears is due to increased disbursements on infrastructure development. The first task is to achieve fiscal sustainability by reducing the deficit over the medium term to sustainable levels of 3 to 4 percent of GDP. In this regard, I will ensure that we enhance measures to achieve fiscal restraint or consolidation, by implementing well-targeted expenditure measures. The second, and related task, is to increase our capacity to mobilize resources,” said Ng’andu.
Other cabinet decisions were that government indefinitely postpones the contraction of all new non-concessional loans in the intervening period; cancels some signed but undisbursed loans; increase the control and management of disbursements on foreign-financed loans and reduce the deficit to induce lending to the private sector.
It is worthy to note that the International Monetary Fund (IMF) has continuously warned that should the country not put any breaks on its borrowing and focus on enhancing economic growth, things will deteriorate further. The IMF team also projected Zambia’s growth to slow from 3.7 percent in 2018 to 2.3 percent in 2019.
Surprisingly despite having these financial issues and putting austerity programmes and campaigns in place, the government is yet to cut its luxury cars and private Jet. It will be recalled that in 2018 at a time when the govt of President Edgar Lungu was begging foreign nations to help pay down the Eurobond debt, they’re also using tens of millions of Kwacha acquiring dozens of luxury vehicles for themselves from the dwindling national purse. In February this year, Zambia also took delivery of a new Gulfstream G650 VIP jet, which arrived from Israel. Many African countries are also faced with similar challenges confronting Zambia due to excessive spending without control.