Zambia’s finance minister on Friday said the country would not take on new external commercial loans in 2021 and limit existing projects in a bid to reduce spiralling debt.
The mineral-rich southern African country’s public debt increased by 4.3 percent in the first six months of 2020, reaching $11.97 billion (10.3 billion euros) in June.
That debt already represented around 80 percent of GDP by the end of 2019, according to the African Development Bank (AfDB).
“Government remains committed to restoring public debt sustainability and has embarked on a number of initiatives to achieve this objective,” Finance Minister Bwalya Ng’andu announced in a 2021 budget presentation.
“These include cancellation, postponement and re-scoping of projects. Further contraction of new commercial external debt has been stopped,” he added.
Ng’andu said $1.1 billion (947 million euros) in pending loans had been cancelled and another $280 million (241 million euros) saved through project changes.
He reiterated that the government plans to apply for a G20 initiative to suspend debt servicing and said similar relief was being sought from external commercial creditors.
Earlier this week, government asked for a six-month debt repayment holiday on three Eurobonds due to the economic impact of coronavirus restrictions.
As Africa’s second largest copper producer, Zambia has also been hit by a global decline in metal prices.
Its mining revenue dropped nearly a third between February and April 2020 due to the pandemic.
Global giant Glencore — one of Zambia’s largest miners — announced earlier this year that it would cut capital expenditure by as much as a quarter during 2020 due to disruption to supply chains caused by coronavirus and falling commodity prices.
The government has since proposed to up its 10 percent shareholding in Glencore subsidiary Mopani Copper Mines (MCM) to save jobs.
Ng’andu said the government had “offered to acquire additional shares” in MCM and “terms of purchase” were being negotiated with Glencore.
Zambia has previously defaulted on loans acquired for several construction projects, including Chinese-funded ones, resulting in some being suspended or abandoned.