‘Zambia’s debt stock sustainable’
Published On April 28, 2014 » 1896 Views» By Moses Kabaila Jr: Online Editor » Business, Stories
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THERE is no cause for alarm over Zambia’s current debt stock because it is sustainable and the Government is in total control, Secretary to the Treasury Fredson Yamba has said.
Mr Yamba said the country’s external debt obligations had remained on course in line with the need to maintain the credit worthiness and safeguard macroeconomic stability through debt sustainability.
In an interview in Lusaka, Mr Yamba said both external and domestic debt levels remained below the international thresholds of 40 and 25 per cent respectively.
Mr Yamba explained that the Government carried out a debt sustainability analysis to determine how much the country was able to borrow and the interest payments required in the medium to long-term.
“Currently we are able to determine with high degree of certainty that we will be meeting the interest payment on the US$750 million Euro Bond and the $1 billion sovereignty bond.
“In going forward, we are still below the 40 per cent external debt threshold when we exclude the new bond we have just acquired,” Mr Yamba said.
According to statistics from the Ministry of Finance, as at March 31, 2014, external debt stood at US $3.16 billion or 15.72 per cent of Gross Domestic Product (GDP), while domestic debt stood at K20.2  billion or about 16.57 per cent of the GDP.
In the  period under review, total external debt service including principal and interest payments, stood at $48.8 million of which $8.9 million was a payment made in January, $2.3 million in February, and $37.7 million in March, 2014.
During the same period, total domestic debt service involving principal plus interest payments, stood at K2.6 billion of which  K930.8 million was a payment made in January, K887.3 million in February, and K830.2 million in March, this year, respectively.
Mr Yamba said the external debt was very low saying that they should not be any cause for alarm.
“In terms of the interest payment this is something that we have factored in the current budget and going forward we shall be factoring in the interest payment in the national budget so this is something that is manageable.
“I know there are concerns about us getting back in the debt trap and I would like to state that our current external debt is well below our GDP which is the total worth of our country and there is no need for alarm … things are under control,” Mr Yamba said.
He said the Government had the capacity to pay back the debts that had been incurred.
On the US$1 billion sovereignty bond, Mr Yamba said the proceeds from the bond would be used to finance programmes in the current national budget.
“The money will be used to finance projects such as roads, energy and other programmes outlined in the 2014 budget,” Mr Yamba said.

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