Zambia plans to cancel more than $2bn in projects to get debt under control

Drilling operations at a depth of 516 meters below surface at the Chibuluma copper mine in Zambia’s Copperbelt region, January 17, 2015. REUTERS/Rogan Ward

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LUSAKA, July 10 (Reuters) – Zambia is canceling more than $2 billion in commercial loan-funded projects to reduce the risk of accumulating more non-concessional debt, the finance ministry said.

In 2020, Zambia became the first country to default in the era of COVID-19. At the end of 2021, its external debt stood at $17.27 billion, of which China held $5.78 billion, and it is in negotiations with its creditors and the International Monetary Fund (IMF) to get out of this hole. debt. Read more

Zambia was in the process of canceling projects worth an estimated $2.1 billion, the medium-term budget plan released by the finance ministry on Saturday night showed, although it gave no details.

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A Treasury spokesman did not immediately respond to a request for a breakdown.

Zambia’s economic growth in 2022 is expected to slow to 3.1% from 3.6% recorded in 2021, mainly due to the expected decline in agricultural sector output.

The economy of Africa’s second largest copper producer is expected to grow by 4%, 4.1% and 4.4% in 2023, 2024 and 2025, respectively, according to the ministry’s plan.

The decision to scrap the projects is part of a broader debt restructuring process, he said, adding that he expected bilateral creditors to provide adequate funding assurances for approval. of an IMF program currently under discussion.

The government was also in the process of amending the law to increase parliamentary control over borrowing, he added.

The medium-term macroeconomic objectives 2023-2025 also include maintaining inflation in single digits, averaging 9.2% in 2023, 8.2% in 2024 and 7.3% in 2025, he said. he adds.

The government also plans to maintain reserves of up to three months of import cover, he said.

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Reporting by Chris Mfula; Editing by Tim Cocks and Hugh Lawson

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