Finance Minister Dr Bwalya Ng’andu has admitted that the 2020 national budget will need to be revised.
Dr Ng’andu said Covid-19 has caused a government financing gap of at least 20 billion Kwacha ($1.09 billion) to 29 billion Kwacha this year which accounts for as much 40% of planned revenue.
In an interview in Kitwe on Monday, Dr Ng’andu also admitted that Zambia was “over ambitious” with its borrowing.
He said Zambia is seeking to restructure its debt after years of “over-ambition” in borrowing to plug an infrastructure deficit.
Dr Ng’andu said Zambia has stopped taking on new commercial debt and is seeking to cancel some loans that it’s contracted but not yet received.
He said the country also aims to restructure loans already disbursed as the government strives to achieve debt sustainability that would allow it to tap emergency financing from the International Monetary he said.
He also referred to restructuring to describe what the government has so far called a “liability management exercise” of its external debt.
The Finance Ministry is seeking financial advisers for this process, which will include all of Zambia’s external debt.
“There was an over-ambition in terms of borrowing,” he said. When asked if the nation’s debt was unsustainable, Dr Ng’andu said “everybody knows that.” The Finance ministry knows that.”
He said the Ministry has written to lenders with which it had contracted debt, but not yet received the money, asking them to cancel or reduce the projects.
In February, he said the government could reduce the total $7 billion of contracted but undisbursed debt by about $5 billion.
Zambia is also planning to restructure loans it’s already received and in its external debt count, which totaled $11.2 billion at the end of last year including $3 billion in Eurobonds.
“The idea was to begin the process of restructuring — talking to the lenders with the view to restructure the loans,” Dr. Ng’andu said.
“We have gone in this process by seeking to get professional advisers on debt. There was a process which has been completed last week of assessing possible friends that can work with us in terms of helping us to restructure our debt.”