Finance Minister Felix Mutati has disclosed that Zambia’s External debt stock as at end-May 2017 increased to US$7.2 billion from US$6.9 billion in December, 2016.
This is on account of new loans which have been accrued.
The stock of domestic debt stock was K38.6 billion in May 2017 compared to K33 billion in December 2016.
The increase is due to Government’s continued borrowing from the local commercial banks.
Mr Mutati disclosed this in Parliament on Wednesday when he delivered a ministerial statement on the state of the economy and an update on the engagement with the International Monetary Fund (IMF).
He also revealed that as at end-March, 2017, the stock of domestic arrears was K17.35 billion after government paid out a total of K4.3 billion towards clearance of arrears in 2017 alone.
Mr Mutati said in order to ensure continued debt sustainability, Government has finalized a Medium Term Debt Strategy that provides a framework for prudent debt management.
He further said regular debt sustainability analysis will be the guiding principle for future borrowing activities.
And on the Gross Domestic Product estimates for 2017, Mr Mutati said growth in 2017 is projected to rise to 4.3% against an initial forecast of 3.4%.
He attributed this to increased agricultural output, recovering generation for electricity and higher mining output supported by better prices and power supply.
Mr Mutati said other sectors that are supporting growth are construction, wholesale and trade and tourism sectors.
The Finance Minister also disclosed that the country’s current account deficit narrowed to US$257.1 million in the first quarter of 2017 from a deficit of US$574.7 million in the fourth quarter of 2016 largely due an improvement in the trade and primary income balances.
He said as at end-May 2017, foreign reserves stood at US $2.4 billion, which translated to around 3.3 months of import cover as Government’s targets to attain 4 months of import cover over the medium-term.
On revenue collection in the first five months of 2017, Mr Mutati said revenues under-performed by 10% compared to the budget.
He said the underperformance in revenues has been on account of low tax compliance by taxpayers, and delayed implementation of budget measures such as land titling and the installation of electronic fiscal devices to improve VAT collections.
Mr Mutati also blamed the low revenue collection to delays in the implementation of electronic equipment in the communications sector to improve the performance of excise duty and the introduction of a single window at entry points to reduce turnaround times at borders and boost revenue.
He said following the lower than projected revenues during the first five months of 2017, the Government, will reduce and realign expenditures to meet its deficit target and fiscal consolidation objective.
On the engagement with the IMF, Mr Mutati said the major issues required to be addressed for Zambia to proceed to conclusion mainly relate to higher than projected budget deficits, accumulation of arrears and an increase in debt levels.
He said government is confident that it will get a Board resolution on the bail out by August this year.