ZAMBIA’S total external debt stock has risen sharply to US$19 billion since 2008, according to the latest World Bank’s International Debt Statistics (IDS) 2020 published on October 2 this year.

And World Bank Group president David Malpass has called for debt transparency from governments.
At end-2018, outstanding public and publicly guaranteed external debt stood at US$9.9 billion compared to US$1.1 billion at end-2008.

The report further stated that Zambia is among the group of low- and middle-income countries that have recorded the highest increases in external debt between the period 2008 and 2018.

The report stated that total external debt stocks for Zambia over the same period increased by 521 per cent, with the country accumulating a total of $19.1 billion external debt stock.

As of 2018, Zambia’s Gross National Income (GNI) stood at $25.9 billion.

With Zambia’s debt stocks on the incline, all the relevant indicators breached the relevant thresholds, the report shows.

In 2018, Zambia’s external debt to GNI was reported at 74 per cent, showing an increase from 19 per cent in 2008, 35 per cent in 2014, 57 per cent in 2015, 71 per cent in 2016 to 75 per cent in 2017.

Additionally, the debt to export ratio had hit 191 per cent, compared to 54 perc ent in 2008, the report stated.

Reserves to external debt stocks had dropped to below eight per cent from 36 per cent in 2008.

The debt service to exports ratio breached the 15 per cent threshold, compared to three per cent in 2008.

GNI is the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad.

According to the report, the country’s long-term principal repayments stood at $679 million up from $118 million.

While long term interest repayments have reached $702 million, from $39 million in 2008, disbursements on external debt, long-term for Zambia, were reported at $2.7 billion in 2018 up from $239 million in 2008.

And Malpass stressed the need for transparency as a critical part of attracting investment.

“Debt transparency should extend to all forms of government commitments, both explicit and implicit. Transparency is a critical part of attracting more investment and building an efficient allocation of capital, and these are essential in our work to improve development outcomes,” stated Malpass.

“Sustainable borrowing is an important tool for economic growth and poverty eradication. It boosts countries’ capacity for long-term financing to invest in infrastructure, education, employment, and health. However, the rapid rise in debt accumulation and the shifts in debt composition pose new challenges for managing it. For both borrowers and creditors to safeguard debt sustainability, and for governments to design effective macroeconomic policies, debt transparency is critical. Accurate and comprehensive information on the levels of debt, as well as its composition, is more necessary than ever.”

1 COMMENT

  1. In Bill#10 Government wants the constitution amended so that they can borrow without parliamentary approval.

    The world bank president on the other hand is urging countries to borrow and issue guarantees transparently and I quote;

    “Debt transparency should extend to all forms of government commitments, both explicit and implicit. Transparency is a critical part of attracting more investment and building an efficient allocation of capital, and these are essential in our work to improve development outcomes,” stated Malpass.”. End of quote

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