Government last night won the motion to increase the ceiling on external borrowing from the current K35 billion to K60 billion.
This means that Government can now borrow up to K60 billion.
The motion which went to elections in Parliament last night, saw the “Yes” getting 74 votes as opposed to the “No”s who got 41 votes while one vote was absent.
Finance Minister Alexander Chikwanda told the House that the treasury required additional resources to go towards financing some projects in 2015.
He said the funds could only be sourced externally to avoid high domestic interest rates and crowding out the private sector.
Mr Chikwanda said that the proposed borrowing would put the Government in a stronger position to deal with developments in the global and domestic economies which had invalidated some of the assumptions used in formulating the 2015 budget.
Zambia’ total public debt was still around 32.7percent and external debt was at 18.5 of the Gross Domestic Product, far below the internationally accepted thresholds of 40 percent.
Mr Chikwanda said Government was determined to maintain sustainable debt levels as it was fully aware of the effects imprudent borrowing can have on the economy and was mindful of overburdening the future generations with debt.
He said the external borrowing will be used to recapitalise state sponsored lending institutions which will support small and medium enterprises.
It would also go towards recapitalising Nitrogen Chemicals of Zambia to end fertiliser imports and Zambia Railways to equip and reinforce the railway system to relieve the pressure on the road network.
He said the Zambian economy was not at the verge of collapse.
But Opposition MPs urged Mr Chikwanda to withdraw the motion as Zambia was already faced with a debt crisis.