Zambia’s external and domestic debt stock has continued rising with the latest official figures showing it now stood at US$10.23 billion as at end of June 2019.
This is against the end-March figures of US$ 10.18 billion.
Domestic debt in terms of securities and bonds as at end June 2019 also rose to K60.3 billion compared to the end-March position of K58.3 billion.
This was revealed by newly appointed Finance Minister Bwalya Ng’andu during his quarterly media briefing.
Dr Ng’andu said the external debt stock as at end June 2019 was US $10.23 billion compared to US $10.18 billion at end March 2019.
He added that the stock of guarantees is currently US $1.3 billion, unchanged from the end March 2019, and end-December 2018 position.
“During the quarter, subscription rates for government securities declined relative to the first quarter of 2019, due to liquidity challenges, perception and exit of foreign participates in the market. Arrears stood at K16.7 billion at as end March 2019, up from K15.6 billion as at December 2018. The increase in arrears is due to increased disbarments on infrastructure development,” Dr Ng’andu said.
And the preliminary data indicates that the economy shrunk in the first quarter to 2.6 percent compared the 2.7 percent recorded in the first quarter of 2018.
“Growth was driven by the wholesale and retail and information and communication sectors. The financial and insurance sector also performed favourably. Positive growth was also recorded in electricity generation and transport. Mining and Agriculture growth was subdued.
He added, “Looking forward to the rest of 2019, risks to growth include electricity load management being carried out by ZESCO that will affect most sectors. Further, the continued lower investment and subdued commodity prices may affect copper production. Climate change challenges continue to weigh down agricultural production and electricity generation.
“On the basis of these risks, we project that growth will be in the 2 to 3 percent range in 2019, and to gradually pick up in 2020 and the medium term.”
On Sales Tax Implementation, Dr Ng’andu said the timing of the introduction of Sales Tax will be addressed in Parliament.
“Having finalized country-wide consultations on the switch from VAT to Sales Tax, we are now addressing issues that have come from the consultation process. These include the cascading effects due to multiple value chains and the need to avoid loss of employment due to possibilities of value chains dying off including the timing of introducing the tax and the need to protect manufacturers. These will be addressed as the process evolves in Parliament.”
On tax collections, Dr Ng’andu tax said over the first half of 2019, total revenues and grants amounted to K32.6 billion, 8.31 percent above the projection of K30.1 billion.
He said domestic revenues at K32.1 billion were above target by 9 percent.
“This was mainly driven by higher nontax revenues collections, mostly from declaration of dividends. On tax revenues, VAT collections were higher than projected by 17 percent, although refunds have increased to an average of K1.4 billion per month from around K800 million in 2018. This has deprived the revenues required for capital and social sector spending,” he said.
Dr Ngandu also admitted that higher fiscal deficits have been driven, by higher than programmed external project financing.
“Thus, Government has taken measures for management of project disbursements, debt cancellation and rescheduling to bring down deficits to sustainable levels. This is in line with the SADC macro convergence regional targets. This will be supported by measures to postpone and cancel some contracted but not disbursed loans, which is in line with the directive by the President from the special Cabinet Meeting of 27th May, 2019. This is an activity which I intend to actively engage my fellow Cabinet Ministers.”
On foreign reserves, Dr Ng’andu said external Gross Reserves as at end June 2019 remained at the same level as at end March 2019 at US $1.41 billion which is 1.6 months of import cover.
“The Government will continue with policy measures to support the build-up of reserves, which among others, will include payment of mineral royalty in US dollars and buying of foreign exchange from the market by the Bank of Zambia. Measures on gold purchases will also continue,” he said.