AfDB Lifts Sanctions

In a letter addressed to the Ministry of Finance dated December 26, the African Development Bank (AfDB) has confirmed that it has lifted sanctions imposed on Zambia.

The Government had previously revealed that the Bank placed sanctions on Zambia as a result of the default in payment of a $1.4 million debt.

The Government blamed the delay in part on the fall of the kwacha against the United States dollar. The currency has dropped 21 per cent in 2019, making it the world’s third-worst performing currency this year.

The AfDB loan is not the only one the Government has defaulted on in recent times. Earlier in December it was reported that it had failed to make payments on the loan of US $107 million, secured from Italian bank Intesa San Paolo in order to purchase a pair of military transport planes. According to Africa Confidential additional charges will be incurred as a result of the late payment.

The defaults raise concerns that Zambia will default on its Eurobonds next year, with the International Monetary Fund (IMF) warning that high debt levels and shrinking foreign exchange reserves have left the economy vulnerable.

For some time now the PF has been talking about restricting its borrowing. However, little appears to have been done on this score. In 2018 alone external debt rose from $8.74 billion to $10.05 billion, while in 2019 $2.6 billion in additional external loans were contracted.

 Also of concern is proposed legislation in the form of the Constitution Amendment Bill No. 10 that may pave the way for the President to contract additional debt without consulting Parliament.