Zambia recently elected a new government. The national treasurer spokesman confirmed that the government has a foreign debt of almost $2 billion. The debt has accumulated over the past 5 years.
The role of the newly elected government during the first moments is to make a report of the past activities. They must ensure they have made perfect reports on the available funds before drafting their budget. Also, if the debt is too large, the investigation must start immediately to make sure the total amount borrowed was used for the last coin. By doing so, it’s preventing corruption, which is a disease in Africa.
The report showed that the government also owed some external bodies large sums of dollars. In total, the country has to pay 14.48 billion dollars to some organizations and individuals. This equals 60% of the country’s Gross Domestic Product.
Although they have been trading together, Zambia owes China a lot. The debt has accumulated to almost 18 billion dollars. The interest keeps on rising monthly, which might hit $20 billion by the end of 20222. The new government is shocked at how they will deal with such bad debts. It’s unusual for a country to experience such debts.
Edgar Lungu, the former president of Zambia, borrowed a lot of money. He was doing this to fund his big agenda in the country. When asked, he said that the infrastructure of Zambia has improved since he joined the government. Edgar has much proof to show people that all the money borrowed was used maximum. But, is it okay to borrow large amounts of money to support your infrastructure?
It’s his long-term opposition leader who took over the leadership during the August elections. President Hakainde Hichelima held a long talk with the International Monetary Fund to find solutions. He wants to know how he might drive the nation financially. Hon. Hichelima must look for a better way to restructure their debts.
During the pandemic, it was Zambia who decided to default their debts first before other African countries could join the mission.
The Zambian citizens have something to worry about. When the debt is too high, there are chances of increasing the tax. This, in general, will mean a shoot in the price of goods and services. Common citizens are the ones on the bad note. They will be forced to survive in harsh conditions if the government decides to take that action.
Also, some private companies will pass through difficult moments. The tax imposed on such organizations is always higher as compared to government parastatals. It’s also unfortunate for these individuals who had an interest in starting their business from loans. The national bank has inadequate money to let out large amounts of loans with unpredicted returns.
Zambia had the worst moment during the covid-19. But the vaccine has brought some hope to the world. Almost 60% of the business is back. We even have new private businesses which opened during the pandemic. The country is working to regain its economic balance. For the past few months, the government has shown some improvement. Let’s wait for the next quarter.
MORE:
