FINANCE Minister Alexander Chikwanda has said that Zambia’s external debt is manageable and the Government has remained steadfast in exercising prudent fiscal management.
Mr Chikwanda said the country had an external debt of US$4.8 billion, representing 18.5 per cent of the Gross Domestic Product (GDP) which was far lower than the internationally recognised threshold of 40 per cent.
Mr Chikwanda said this in Parliament during a ministerial statement on the 2015 mid-year economic and budget review statement.
Zambia’s domestic debt is K20.5 billion, representing 14.2 per cent of the GDP, bringing the total debt to 32.7 per cent.
“As members of this August House will note, our debt position is far below the internationally accepted threshold of 40 per cent,” Mr Chikwanda said.
The minister said the Government had set up a sinking fund for the purpose of repayment of the 10-year sovereign Eurobonds amounting to $750 million and $1 billion issued in 2012 and 2014, respectively.
In addition, general regulations for the management and operations of the fund to address issues of transparency and accountability had also been established.
Mr Chikwanda said the Government faced a number of challenges in executing the 2015 Budget due to unforeseen pressure affecting revenue and expenditure.
He attributed this to low copper prices and the poor performance of the global economy that adversely affected the local economy.
There was also low and late rainfall that negatively affected the agriculture sector.
Budget overruns could not have been avoided, which included the Presidential by-election in January this year.
The Government revised the mining tax regime to address concerns that were raised by the sector resulting into a K2.12 billion below the Budget level.
Expenditure increased by K2.1 billion in response to the rise in interest rates in arrears on the road sector projects and the purchase of crops.
The initial targeted economic growth was seven per cent but is now set at 5.8 per cent.
The projected deficit is at K20 billion from the initial target of K8.5 billion and this would be financed by increasing rationalised expenditure involving limiting expenditures on existing projects and not embarking on new ones and external financing.
Mr Chikwanda also proposed to the House to peg external borrowing at K60 billion from K35 billion.
The Government would continue closely corroborating with the Bank of Zambia and financial institutions to lower the cost of borrowing for investors.
Information and Broadcasting Services Minister Chishimba Kambwili also made a ministerial statement on the digital migration.
Mr Kambwili said Zambia was ready for the migration, which is on today, and that the phase one of the exercise had been successfully completed which included all the towns along the line of rail.