Prominent Lusaka based economist Professor Oliver Saasa is concerned with the speed at which Zambia is contracting debt saying it is likely to harm the country’s economy.
Last week, Minister of Finance Margret Mwanakatwe announced during the update on economic development that the country’s external debt stock for the first quarter of 2019 marginally increased to US$ 10.178 billion from US$ 10.05 billion at end of 2018 while the domestic debt stock at end of March 2019 was K58.21 billion down from K58.26 billion recorded at end of 2018.
Prof Saasa told the Zambian Business Times – ZBT in an interview that the slight increase in external debt is an indication that the economy is slowly being chocked and that if the situation is not taken care of, the economy will completely flop.
He said the country’s external debt commitments are very high and likely to affect the cost of production and investment in many sectors hence result in the increase in the cost of living for many Zambians.
“We need to understand that when there is crisis in an economy, the cost of living goes up due to insufficient funds , people that are supposed to receive payments or salaries are delayed and the cost of doing business on the market goes up because of the changes in prices of goods and services and inflation is the worst enemy to any economic growth prospects,” he said.
He added that the country’s reserves at the central bank are dwindling and can not last the country for more than two months import cover adding that, Zambia would not survive if a crisis emanated in the economy hence the need to quickly attend to this matter without looking forward to contracting more debt.
Meanwhile, the finance minister also announced that the country’s reserves position at end of February 2019 was US$ 1. 43 billion, down from US$ 1.56 million at end of December 2018.
Prof Saasa has however urged government to reduce on expenditure and cut down on contracting new debt under the current situation and has noted the need to cut down expenditure at some departments at the various ministries that are a financial threat or not adding value at this point in time.
He has further emphasized on need of growing the economy and facilitating private sector growth if the country is to develop.
