INFRASTRCUTURE development the country is experiencing has increased Zambia’s external debt from US$4.8billion last year to US$6.3billion by end of August this year, Finance Minister Alexander Chikwanda ha said.
Presenting the 2016 national budget yesterday, Mr. Chikwanda said the stock of government’s external debt as at end-August 2015 was US$6.3billion representing an increase of about 31.0 percent from the US$4.8 billion as at the end of December, 2014.
“The increase in the external debt stock was mainly on account of the US$1.25 billion Eurobond that was issued in July, 2015 as part of the financing required for the 2015 Budget. Some of the projects that have benefited from the proceeds of the bond raised in 2015 include infrastructure development in the transport, health, education and agriculture sectors,” he said.
Mr Chikwanda said other investments were in water supply and sanitation infrastructure, the development of infrastructure in newly created district recapitalization of state owned enterprises and the provision of support to small medium scale enterprises. Dr. Chikwanda explained that the total external debt service for the first nine months of 2015 amounted to US$225.4million, adding that preliminary data indicated that the country’s domestic debt as at the end of September 2015 stood at K26.5 billion compared to K23.5 billion as at the end of December, 2014.
He also said the local currency faced a lot of hostility on the market against the dollar and other foreign convertibles because of the unsustainable copper prices and market at the international market.
The minister explained that foreign exchange markets had experienced considerable pressure this year with the Kwacha depreciating against major trading currencies due to international and domestic factors.
He said in order to moderate the impact of these factors; the Bank of Zambia sold foreign exchange to the market and tightened monetary policy through an upward adjustment in the statutory reserve share.