LUSAKA, Oct. 11 (Xinhua) -- The International Monetary Fund (IMF) has expressed concern at the pace at which Zambia's public debt, especially external debt, has increased, which puts the southern African nation at high risk of debt distress.
In its press release on Tuesday following the conclusion of Article IV consultation with Zambia, the IMF said the country needed to slow down on contraction of new debt, especially non-concessional loans, to maintain debt sustainability.
"While recognizing the need to address infrastructure gaps, they emphasized that to maintain debt sustainability, it is critical to slow down on the contraction of new debt, especially non-concessional loans, strengthen debt management capacity, and improve project appraisal and selection processes," the IMF said.
It added that public debt has been rising at an unsustainable pace and has crowded out lending to the private sector, hence increasing the vulnerability of the economy.
But it commended the authorities for coming up with a medium-term debt strategy for 2017-2019 which will serve as a tool in guiding decision making with regard to prudent debt management.
According to government figures, Zambia's total public debt stood at 12.45 billion U.S. dollars at August 2017, representing 47 percent of Gross Domestic Product (GDP), with the external debt standing at 7.5 billion dollars.
The IMF, however, welcomed recent improvements in the country's economic outlook although domestic and external risks still pose significant challenges.
The authorities have since been advised to take advantage of the current favorable conditions and implement decisive and prudent macroeconomic policies and reforms to place public finances and debt to a sustainable path, build international reserves and increase the economy's resilience to shocks as well as achieve inclusive growth.
