ZIPAR blames high interest payment on increased domestic financing
Published On February 23, 2018 » 1905 Views» By Evans Musenya Manda » Business, Stories
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By CASSEY KAYULA –
THE Zambia Institute for Policy Analysis and Research (ZIPAR) says the switch from external to more domestic financing has resulted in higher interest payments in the country.
ZIPAR executive director Pamela Nakamba-Kabaso said the total interest payments on debt amounted to K 9.8 billion which was above target by 16.9 per cent last year.
Dr Kabaso said that change in the debt portfolio from external to more domestic debt has it’s challenges as interest costs of domestic issuances especially at longer maturities, was higher compared to foreign borrowing.
She was speaking during the ZIPAR and Civil Society Organizations network round table discussion in Lusaka yesterday.
“The increase in interest payments has inevitably an adverse impact on social sector spending which has been a major cause of the social ills been experienced.
“For instance in 2017 the Government was not able to cover over half 56.1 per cent of the funds earmarked for water and sanitation,” she said.
Dr Kabaso said issues of debt and debt repayment are inextricably linked to the day-to-day lives of the Zambian people.
She said there was need to advocate for contraction of debt that will translate into projects of greater benefits to the country.
Dr Kabaso said there was need to slow down on debt accumulation because higher debt leads to higher interest payments resulting into further crowding out of social sector expenditures.
Government through the Ministry of Finance last year launched a medium term debt strategy in order to reduce the country’s vulnerability to foreign exchange and refinancing risks which made a switch from external to more domestic borrowing.

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