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Friday, 7 September 2007

Forever in debt...

The Times of Zambia quotes the Finance and National Planning Minister's revelation that Zambia's external debt stock as at the end of last year stood US$957.4 million while domestic debt stock was K8.9 trillion. It does indeed appear that the prospect of an "externally" low debt Zambia is not one which some of us will experience in our life time even with the debt relief!

That's the 'neutral' news. The 'bad news' is that aside from the new credit card bills we have yet to see tangible results on how Government is using the new 'fiscal space' it has been afforded following the debt cancellations. The 'good news' is that Magande reckons we can live on the credit card for a long time because we can afford it:

"With the projected growth of the economy of at least six per cent per annum and the projected debt service requirements in the coming years, the Government is comfortable that it will be current on all debt service obligations"
Actually, Magande's 'good news' could well be bad news down the line. Really what he is saying is that Zambia's booming copper industry will allow us not just to grow but potentially lead to a stronger Kwacha. Except then we really do have the dutch disease. Perhaps now is the time to really get on with those agricultural and land reforms? The fear is that when copper really does boom, it may not be good news for the farmers. This is why Zambia needs to diversify, and diversify hard. Tourism also needs to improve - that requires push for greater liberalisation of air travel and improvement in hotel infrastructure. And of course there's the not-so-small problem of our domestic debt which is currently crowding out private sector borrowing.

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