Zambia’s borrowing manageable says Chikwanda

Zambia’s external debt is within sustainable levels as it stands at only 15 per cent of the Gross Domestic Product (GDP), Finance Minister, Alexander Chikwanda has said.

Mr Chikwanda told journalists in Lusaka yesterday that Zambia could not fall into a debt trap because it has not borrowed beyond 40 percent of the GDP.

He said the acceptable sustainable external borrowing threshold was 40 per cent of GDP.

Mr Chikwanda said Zambians should not be concerned that the country would revert to a highly indebted country because the current external debt was manageable.

He said the external debt was paid over a period of time which allowed government to service the debt without any problem.

And African Development Bank president Donald Kaberuka said external borrowing was not bad if the debt was managed well and money put to good use.

Dr Kaberuka said African countries could not only depend on aid alone but also should also go for rating and financial markets to source financing. He, however, warned that countries should be careful in the manner they handled borrowings to avoid falling into the debt trap of the 1970s.

Dr Kaberuka said the best way to use borrowings was to invest the money in infrastructural development as opposed to consumption.