Zambia Finance Minister, Alexander Chikwanda, has announced that the current levels of external debt in Zambia are currently just 15% of the total Gross Domestic Product (GDP).
According to Hon Chikwanda, the current external debt is manageable and is paid over a period of time, thereby allowing the government to easily repay the debt.
This is in line with comments from Donald Kaberuka, President of the African Development Bank, who has been reported as saying that external borrowing is acceptable if it is well-managed and utilized appropriately.
Additionally, the economic director of the Bank of Zambia, Dr. Francis Chipimo, has said that, while the sustainability of Zambia’s debt should be closely monitored, it is currently at a sustainable level.
“Debt sustainability is something that we should keep an eye on and I think currently we had a debt sustainability analysis done by the IMF and the World Bank and recurrently the government also did a sustainability debt analysis,” said Dr. Chipimo, “If you look at both our external and domestic debt, it is around 30 per cent of GDP which is a lot lower than the thresholds which are recognized internationally, so our debt position is sustainable.”
Because the acceptable and sustainable external borrowing threshold in Zambia is 40% of the GDP, according to Hon. Chikwanda it is unlikely that Zambia will fall into a debt trap.