By NANCY MWAPE
THE Bank of Zambia (BoZ) says Zambia’s debt sustainability outlook is positive but there is need to maintain performance in the implementation of policies and ensure macroeconomic stability through prudent fiscal and sound monetary policies.
Government’s total external debt as at September 2011 was US$1,951.6 million from US$1,639.2 million as at end-December 2010    
Bank of Zambia governor Michael Gondwe said yesterday that the 19.0 percent increase was as a result of disbursements from various creditors, notably the World Bank and supplier credits.
Appearing before the parliamentary committee on Economic Affairs, Dr Gondwe assured the parliamentarians that Government has put in place a debt management strategy.
He said this reflects a commitment to monitor public debt and ensure that it remains sustainable in the medium to long term.
Dr Gondwe said now that Zambia is considered a lower- middle income country, Government has to borrow to build infrastructure for economic development to attract investors and create jobs.
He said there is need to diversify the economy from mining to reduce vulnerability to external shocks associated with movements in copper prices.
“Zambia’s debt indicators remain well below the risk threshold levels…maximising concessional borrowing has contributed to lowering the average cost and risk of debt,” he said.
He said in line with debt strategy, recommendation from the medium term debt strategy analysis done in 2009, included the need for Government to continue strengthening institutional capacities, improve cash management, disseminate the strategy and continue monitoring, evaluation and reviewing.
Zambia’s debt stock as at the year 2010 was US$3,360.2 million of which Government’s external debt was US$1,639.2 million while the private sector debt stock was US$1,721 million.
He said since 2005, the amount of debt accumulated by the private sector has more than trebled.
Dr Gondwe said preliminary data for 2011 shows that Government external debt serviced amounted to US$87.45 million while in 2010, US$51.27 million was paid to various creditors as principal, interest and other charges.
He said loans contracted by Government have been invested in sectors such as energy, agriculture, roads, health, transport and housing development.
Commenting on domestic debt, he said as from 2005 to 2011, the debt stand at K14,182.06 billion.
Dr Gondwe said Government has always paid its domestic debt interest obligation.
He said debt sustainability shows that Government has the ability to serve its debt obligations.