Lusaka – Zambia says the figure is US$11 billion. The World Bank insists it is US$33 billion.
The scale of Zambia’s indebtedness and how best to navigate the choppy waters has been the fodder of many a media report over the past year, and the picture did not get any clearer this past week.
The World Bank said contrary to the government’s claims that the debt was US$11.2 billion, the figure was nearly triple this.
“Based on the current debt position, even assuming a five percent growth rate, no further borrowing, and setting aside 20 percent of domestic revenues aside each year, it would take Zambia almost 50 years to settle all this debt,” the lender said in its International Debt Statistics report.
But Secretary for Finance Mr Mukula Chikuba insisted the figure was around US$11 billion.
He said the World Bank was conflating debts and arrears of both the government and at least US$14.735 billion owed by the private sector.
Last November, Zambia defaulted on the U$750 million Euro bond coupon when US$42.5 million in interest when it was due. This made Zambia the first country to default on a bond debt.
Finance Minister Dr Bwalya Ng’andu told creditors that the country was unable to pay because of the pressures brought on by the COVID-19 pandemic.
The country is in talks with the IMF to access US$1.3 billion from the institution’s Extended Credit Facility, and the lender has demanded that Zambia first resolve fiscal imbalances, ramp up revenues and improve economic governance.
The IMF, however, acknowledged that COVID-19 had dealt the economy a huge knock, resulting in the decisions to take drastic decisions related to removal of value added tax on fuel and other adjustments.
The IMF pledged to work with the country in enhancing the realization of the 2020-2023 Economic Recovery Plan (ERP), in which the government is pursuing a cocktail of home-grown initiatives combined with external support to reposition the economy.