International Community Increasingly Concerned About Zambia's Hidden Debt

Concerns are growing rapidly that Zambia has ‘hidden debt’. A situation that plunged neighbouring Mozambique into deep financial crisis not long ago. For the past few weeks international financiers have been asking for answers on the country’s true external borrowing, but the treasury and Finance Minister Margaret Mwanakatwe have been characteristically misleading.

The government insists that our external debt stands at $8.7 billion, however a number of specialists have suggested this could in fact be double. The last time this happened was in Mozambique and, as a result, international donors froze fiscal support after it emerged that they had taken $2 billion of ‘off the book’ loans to finance maritime vessels and military equipment.

Nomura bank has recently questioned the true size of Zambia’s public debt, suggesting the government is purposefully lying to the international community about its total spending.

Nomura announced the following;

"Based on documentary evidence, we assess that external debt could be as high as $15.6 billion, while local debt seems almost incalculable given the opacity in lending to state-owned entities from local banks," wrote Robert Besseling.

Chishimba Kambwili has openly accused his former party of cooking the books and recently told the AFP that the debt is in fact as high as $23 billion.

Zambia had been expecting to secure a $1.3 billion loan from the International Monetary Fund (IMF) this year, but the Washington-based lender is unhappy with the country's borrowing plans.

The IMF's representative to Zambia, Boileau Loko, said officials "continue to compromise the country's debt sustainability and risk undermining its macroeconomic stability".

Allegations that the country has not openly disclosed its external debt burden have undermined investor confidence and driven up borrowing cots, according to London-based BMI Research.