To lessen the risk of amassing additional non-concessional debt, Zambia is canceling projects worth more than $2 billion that were financed by commercial loans, according to the ministry of finance. Zambia experienced its first default in the COVID-19 era in 2020. China held $5.78 billion of its $17.27 billion external debt as of the end…
To lessen the risk of amassing additional non-concessional debt, Zambia is canceling projects worth more than $2 billion that were financed by commercial loans, according to the ministry of finance.
Zambia experienced its first default in the COVID-19 era in 2020. China held $5.78 billion of its $17.27 billion external debt as of the end of 2021. It is currently in talks with its creditors and the International Monetary Fund (IMF) to get itself out of this debt bind.
The medium-term budget plan, which was released by the ministry of finance late on Saturday, indicated that Zambia was in the process of canceling projects worth an estimated $2.1 billion, though it provided no further information.
A request for a breakdown elicited no immediate response from a treasury official.
Zambia’s economic growth is anticipated to drop down in 2022 from the 3.6 percent recorded in 2021 to 3.1 percent, primarily because of the anticipated decreased output from the agriculture sector.
According to the ministry’s strategy, the economy of Africa’s second-largest copper producer is anticipated to increase by 4%, 4.1%, and 4.4% in 2023, 2024, and 2025, respectively.
It added that it anticipated bilateral creditors would offer sufficient financial assurances for approval of an IMF plan that was being negotiated. The decision to cancel the projects is part of a larger debt-restructuring process, it said.
According to the statement, the administration was also in the process of amending the law to strengthen legislative control over borrowing.
Inflation should be kept in single digits, averaging 9.2 percent in 2023, 8.2 percent in 2024, and 7.3 percent in 2025, according to the medium-term macroeconomic objectives for 2023–2025.
According to the statement, the government also intends to keep reserves at three months’ worth of import coverage.
