Russia cancelled USD 500 million of Zambia’s external debt to enable the government to free budgetary resources for developmental programs.

Dr SDitumbeko Musokotwane finance minister of Zambia said in Lusaka that the debt relief undertaken under a debt sap process will enable the country carry out various projects needed to grow the economy. The debt swap agreement signed with the Russian government will enable government free budgetary resources in excess of USD 100 million from debt service obligation and channel them to development. Russian is expected under the arrangement provide the debt relief in addition to that already provided under the Paris Club.

Mr Musokotwane said that the government has been able to invest in roads, schools, clinics, hospitals, water and sanitation because of Zambia’s strong economic performance. Government has developed a public-private sector partnership framework to support the participation of the private sector in infrastructure development.

He said that I am sure that the cordial bilateral relationship that exists between our governments will only rise to higher levels. Zambia had before 2005 owed by Paris Club and other external creditors owed them in excess of USD 7.6 billion.

The ascendance by the country to the debt relief through the Highly Indebted Poor Country scheme under then President Mr Levy Mwanawasa, enabled the country to channel the freed resources in infrastructure development. Infrastructure that has been developed after the freed resources include building and rehabilitating new schools, health facilities, roads and poverty alleviation among the people.

Presently, Zambia’s external debt to various creditors stands at about USD 1.2 billion which according to government is sustainable. According to data, Zambia’s current external debt hovers around USD 1.2 billion to USD 1.5 billion. The country’s debt in 2005 stood at USD 500 million after Zambia’s USD 7 billion was forgiven following the attainment of the Highly Indebted Poor Countries completion point.

According to government, Zambia’s current debt is lower than most countries in the region. It is government’s view that the country cannot develop with borrowing hence government is borrowing at a reasonable interest of point seven 5% while the local interest stands at 15%.

Government has to borrow in order to sustain economic growth in the country. Zambia is not at any risk of falling in the unsustainable debt trap with governments continued borrowing because government has the capacity to pay back all its loans. Government has reduced on borrowing as a result of the revised borrowing policy.

(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)