Zambia on course with all its external debt obligations – Chikwanda

GOVERNMENT says it is on course with all its external debt obligations with both foreign and domestic liability levels below the international thresholds of 40 percent and 25 percent, respectively.
Acting President Alexander Chikwanda has also dismissed assertions that Zambia has defaulted on its debt obligation to Brazil, Iraq and China.
According to a treasury brief released by Ministry of Finance spokesperson Chileshe Kandeta in Lusaka yesterday, as of December 2013, preliminary estimates indicate that the total debt stood at 28 percent of gross domestic product (GDP).
Of this, external debt stood at US$3.1 billion (approximately K17 billion) or 13.7 percent of GDP, while domestic debt stood at K17.6 billion or approximately 14 percent of GDP.
Debt service (principal and interest payments) stood at K11 billion or 1.2 percent of GDP (approximately six percent of domestic revenue).
The statement also states that Government will also continue to be mindful of the need to maintain debt sustainability to safeguard macroeconomic stability.
It also states that the economic development programme is in ‘full gear’ but more effort is required from public institutions to ensure planned projects are executed in a timely manner.
And Mr Chikwanda said assertions by some sections of society that Government had defaulted on debt obligations to Brazil, Iraq and China, should be discarded as they are not based on empirical evidence.
Mr Chikwanda, who is Minister of Finance, said the figures being quoted in the public domain are not as a result of delinquency but on account of the special bilateral arrangements between Government and the concerned creditors.
“Which arrangements have been structured under what are referred to as Paris Club Agreed Minutes of 2005; the benchmark for providing debt relief under the highly indebted poor countries (HIPC) initiative,” said Mr Chikwanda.
He said the special bilateral arrangements entered into with Brazil, Iraq and China, allow for suspension of debt service payments during the period of bilateral negotiations pending signing of debt relief agreements.
Mr Chikwanda explained that to resolve the outstanding ‘technical arrears’, Zambia has been negotiating with the governments of the three countries with a view to signing bilateral debt relief agreements.
“The resultant agreements will stipulate the mode of effecting debt forgiveness under HIPC initiative,” he said.
The minister added that the three bilateral creditors are the only remaining creditors that are yet to deliver their share of debt relief to Zambia under The HIPC initiative.
The current debt owed to Brazil is US$67.1 million, Iraq US$37 million and China US$19.2 million.