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Chinese loans unsettles CTPD

The Center for Trade Policy and Development (CTPD) notes with sadness the lack of clarity about exactly how much the Zambian Government owes Chinese lenders is highly problematic and needs to be urgently addressed.

The center is concerned that that the overall level of borrowing from China is not clear.

CTPD Executive Director Isaac Mwaipopo says it appears to be one of the reasons for the breakdown of the negotiations for an International Monetary Fund (IMF) bailout package.

The Chinese Embassy in Lusaka has stressed the level of “investment” in Zambia stating that “there are more than 600 Chinese enterprises investing in Zambia and the total Chinese investment is close to US$4 billion.

Finance Minister Margaret Mwanakatwe recently stated that Government is not contemplating any stock re-profiling but just the flows that fall due in the period of the repayments.

Mrs. Mwanakatwe said China being a natural first creditor and accounting for 28% of Zambia’s debt was a natural creditor to have a discussion with.

But the CTPD Executive Director further notes with concern that in Zambia’s past, debt has been a millstone which has held the country back.

He says in recent years, public debt is once again rising at a significant pace with the external debt stock increased from US$6.95 billion at end of the 2016 to US$8.74 billion by December 2017, and domestic debt, excluding arrears, has risen from US$3.47 billion to US$4.64 billion over the same period.

Mr. Mwaipopo says this comes despite recent evidence of fiscal consolidation, stable exchange rates and improving economic growth and this trend of rising debt is continuing.

He quotes the IMF that estimates that by the end of 2018 overall debt stock is expected to stand at 60% of GDP, up from 35.6% in 2014.

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