By Cecilia Chiluba/Zambia/Lusaka
An Economist says Zambia’s debt portfolio has entered a more established phase following recent restructuring efforts, but that the country remains vulnerable and at high risk of debt distress.
Speaking in an interview, Kelvin Chisanga stressed that Zambia has made notable progress in restoring order to its debt position after moving away from the default risk that previously weighed heavily on the economy.
“Zambia’s debt portfolio has been placed in a stabilized condition, but it still remains vulnerable or fragile,” Mr. Chisanga said.
He explained that government efforts toward debt sustainability have helped create a more manageable framework compared to previous years.
“Looking at where we are, we have made good efforts toward creating a sustainable debt outlook. We now seem to have a fundamental baseline in terms of a sustainable model compared to where we are coming from,” he added.
Mr. Chisanga noted that the restructuring process had eased immediate repayment pressures while helping rebuild investor confidence.
“We have moved out of the default risk into a more manageable profile, but we still remain in a fragile state,” he stressed.
He, however, warned that debt servicing continues to consume a substantial share of government revenue, reducing fiscal space for development spending.
“A major concern is that debt service continues to take up a significant share of government revenue, meaning we still have that debt servicing burden in place,” Mr. Chisanga said.
He added that the situation has limited investment in key sectors of the economy, while Zambia’s heavy dependence on copper exports continues to expose the country to global commodity price fluctuations.
“We have seen that this is limiting investment in key sectors of the economy. Zambia’s heavy dependence on copper exports leaves the economy exposed to eventualities, especially global price fluctuations,” he said.
Mr. Chisanga urged authorities to strengthen domestic resource mobilization in order to secure long-term debt sustainability.
“To secure long-term debt sustainability, Zambia must urgently strengthen domestic revenue mobilization,” Mr. Chisanga added.
