Reuters reports that Zambia is cancelling more than $2 billion worth of projects financed by commercial loans to reduce the risk of accumulating more non-concessional debt, the ministry of finance said.
In 2020, Zambia became the first nation to default in the COVID-19 era. At the end of 2021, its external debt stood at $17.27 billion, of which China held $5.78 billion, and it is in negotiations with creditors and the International Monetary Fund (IMF) to lift itself out of this debt hole.
Zambia was in the process of cancelling projects worth an estimated $2.1 billion, the medium-term budget plan published by the ministry of finance late on Saturday showed, although it gave no details.
A treasury spokesperson did not immediately respond to a request for a breakdown.
Zambia’s economic growth in 2022 is expected to slow down to 3.1% from 3.6% recorded in 2021 mainly due to the expected reduced output from the agricultural sector.
The economy of Africa’s second-largest copper producer is forecast to grow 4%, 4.1% and 4.4% in 2023, 2024 and 2025, respectively, the ministry’s plan showed.
The decision to axe the projects is part of a broader debt-restructuring process, it said, adding that it expected bilateral creditors would provide adequate financing assurances for approval of an IMF programme being discussed.
The government was also in the process of changing the law to increase parliamentary oversight on borrowing, it said.
The 2023-2025 medium term macroeconomic objectives also include keeping inflation down in single digits, averaging 9.2% in 2023, 8.2% in 2024 and 7.3% in 2025, it said.
The government also plans to maintain reserves at three months’ worth of import cover, it said.
The so called economist has failed. He thought running a country is like running choma cow farm
We kicked out the pathetic f.ools because the failed…. now we are cleaning the shi.t you left
Reckless borrowing and spending to facilitate commission payments is over…………
Only projects that will add economic value to the economy immediately will be financed…………
The truth be told………..1/4 of all PF projects were not needed immediately or add no economic value with the rest being over priced…………
Kaizer Zulu, tell us one project you financed using Euro Bonds is performing economically. The idea of loans is to invest so that you get dividends in terms of profit or services. Tell us one which fits in this?
Doug – Dont waste your energy on a UK based Troll/ Impostor
At least tell us the projects not just leaving ambiguity so that you can pick and choose who to fix. This is what the IMF want us to do.They want us to stop spending on development. Power projects will be cancelled, no more building roads etc.
Where do you plan to get the money you want to continue building?
From our natural resources which we keep giving for free.
These projects were cancelled a long time ago during PF
The IMF and Co want us to cut back so that we can pay them instead. These are vicious cycles which African countries find themselves in. We are the only continent not allowed to spend our way to prosperity. Europe is in a much bigger mess but you will never hear them cut back on vital projects.
The reason why we have to pay the IMF is because we ow them. We owe them because in 10 years, the P.(ilfering) F.(ools) looted the national treasury, taking from being $2.5 billion in surplus to being $18 billion in debt. Now we have to pay this money back. You cannot spend when you owe more than you have.
1. This was inevitable & foreseeable, nothing wrong with this decision. Don’t just suspend lifesaving-projects. I posted about the need to have Austerity Measures last year, 3 months after UPND settled in government. HH should have brought in Austerity measures to tighten the rope, reduce deficits, and avoid a further debt crisis. There are a lot of things that can be put on hold. For instance, he has increased salaries for MP’s instead of putting a freeze on all MP’s and senior government technocrats. He talked about the need of having a small government while in opposition – but he has ended up doing the opposite.
2. If a household finds itself in a financial meltdown, sensible parents cut down on luxuries or things you can do without. If not, parents have to find ways to have extra earnings to maintain social and economic vested interest in the household, even things like growing your own vegetables, keeping chicken +++ Its called common sense +++
If a corporation deeps in the red with cashflow, the first thing to do is to cut down some operations spending. It means, if the CEO & Top Executives travel by private jets, you change the policy to use commercial lines. You ask the Board of Directors to having Remote Conference Meeting and not flying to resort hotels for Board Meetings. After the 2008 Credit Crash, the UK, USA, Japan, and German introduced Austerity Measures in…
About time …most of these projects contracted by reckless Lazy Lungu and his Pay Forward (PF) were too inflated and substandard. You just have to face reality on this one and the type of procurement routes do not add value or skills transfer whatsoever to the local construction industry
But why MPs had their salaries increased? Yet the coffers are empty?
We are not discussing salaries here