LIVINGSTONE, Zambia, Aug 23 (Reuters) - Zambia, which is struggling with high debt levels, will avoid a default and will continue to shun new loans as it reins in lending and expenditure, Finance Minister Bwalya Ng’andu said on Friday.
The International Monetary Fund has repeatedly warned that Zambia’s high debt and shrinking foreign exchange reserves leave its economy vulnerable.
Zambia’s external debt rose to $10.05 billion at the end of 2018, compared with $8.74 billion a year earlier, raising fears that the southern African country is headed for a debt crisis.
“Servicing of debt is always priority number one. If anything will suffer it is not debt servicing which will suffer, but something else. We will avoid debt default,” Ng’andu told journalists in the city of Livingstone.
“We are looking at debt in its entirety, with a view to approach the various lenders with a view that we can reach an agreement in which we can collapse various debts into one debt and seek a longer period within which we can meet that obligation,” Ng’andu said, without mentioning specific lenders.
Ng’andu’s predecessor, Margaret Mwanakatwe, said in May that Zambia had delayed the receipt of loans totalling $2.6 billion contracted last year in order to rein in its soaring debt.
Ng’andu said the position had not changed, and reiterated plans to delay some projects and cancel others in order to cut down on expenditure and debt.
“There are no new loans that are being contracted. We are also in the process of identifying projects which can either be cancelled or postponed to reduce expenditure,” added Ng’andu.
Zambia is trying to shrink a fiscal deficit that amounted to 7.5% of gross domestic product last year. (Reporting by Chris Mfula; writing by Olivia Kumwenda-Mtambo Editing by Ros Russell)