Zambia raises external debt ceiling to over $6 billion

Chikwanda’s budget ready today
Chikwanda’s budget ready today

Zambia has raised its external borrowing threshold to 35 billion kwacha from 20 billion kwacha, clearing the way for the government to borrow 7.1 billion kwacha from abroad to finance the 2014 budget.

The announcement by Finance minister Alexander Chikwanda late on Wednesday will heighten expectations that the southern African state could soon issue a second Eurobond after its debut sale was 15 times oversubscribed last year.

Chikwanda told law makers the government needed to raise the external debt limit to finance infrastructure projects in Africa’s top copper producer.

A debt sustainability analysis conducted with the World bank and International Monetary Fund in 2012 revealed that raising the threshold to 35 billion kwacha was sustainable, he said.

“If the external loans ceiling is not adjusted, it will limit the ability to finance government development programmes and constrain economic growth,” Chikwanda added.