There will be need to exercise caution in the contracting of further debts to maintain sustainable debt levels, Finance Deputy Minister Christopher Mvunga has said.
Responding to Patriotic Front (PF) Chongwe Member of Parliament Sylvia Masebo who wanted to know whether it was prudent for the government to contract further domestic and external debts, Mr Mvunga said Government needed to contract debt in order to finance the budget.
Mr Mvunga assured Ms Masebo and the House that Zambia’s ability to carrying out burden and ability to service debt were below the internationally accepted indicative thresholds.
“You may wish to know that critical debt sustainability ratios indicating the country’s ability to carry out burden and ability to service debt are below the internationally accepted indicative thresholds,” he said.
Mr Mvunga said the internal debt service to domestic revenue was 17 percent and external debt service to exports was six percent way below the indicative threshold of 30 percent and 20 percent respectively.
He told the House that the total debt service to domestic revenue was 27 percent which was also below the indicative threshold of 30 per cent.
Ms Masebo wanted to know the external debt stock, as of November 2015 and the total national debt as of December 2015.
The Chongwe lawmaker also wanted to know what the ratio of the total debt to the Gross Domestic Product (GDP) was as of October 31, 2015 and whether it was prudent for the Government to contract further domestic and external debts.
“Mr Speaker, the total external debt stock as of November 2015 stood at U$ 6, 409, 637, 798. 27 while the total national debt as of December 2015 stood at U$ 8, 653, 517, 157. 94,” Mr Mvunga said.
He said the ratio of total national debt to GDP as of October 31, 2015 stood at 52. 65 percent and was below the indicative threshold of 56 percent.