GOVERNMENT should consider borrowing a concessional loan from multilateral partners to refinance the three Eurobonds and other sovereign loans acquired as debt servicing is choking the economy, says economist Lubinda Habazoka.
Dr Habazoka said in an interview that debt servicing was currently strangling the economy and limiting Government activities, hence the need to find new solutions to deal with it.
He explained that acquiring a concessional loan from multilateral partners such as China and Russia would help service the debt using the interest gained from it.
“If we want to normalise our economy so that it continues growing above 7 percent, we should refinance that debt, get a loan that it will start repaying after 10 to 15 years.
Dr Habazoka said such loans were possible and that Zambia would not be the first country to acquire them.
He explained that this would enable the economy to grow above 7 percent.
“Now such a loan cannot be acquired on the capital market because those loans will entail either by coupon payments or yearly interest rates if they are going to be syndicate loans, so we need to seek concessional loans.
“Such loans can be procured with an assumption that our economy is going to grow. What is choking our economy now is debt servicing which has slowed down Government activities as well as low metal prices,” he said.
He further explained that Zambia’s Gross Domestic Product (GDP) was likely to grow between US$50 and US$60 billion in the next 10 years if the refinancing of loans was done on good terms.
“The benefits are a lot, the next ten years we expect our GDP to be at least US$50 or US$60 billion, so such refinancing is a good idea.
“We do not have a sinking fund effective to a level that we are going to use our own resources to pay the debts; we will still need to borrow and this will be clever borrowing,” he said.