ZAMBIA’s total external debt stock has drastically increased to hit a total of US $27.3 billion as at end-December, 2019, mainly consisting of public and publicly-guaranteed debt of over US $11 billion, according to the World Bank.
And Zambia’s Gross National Income (GNI) fell to just US $22.7 billion by the end of last year compared to US $26.6 billion in 2018 despite the principal repayments on the country’s external debt having nearly doubled over the corresponding period under review.
According to the World Bank’s International Debt Statistics 2021 report, Zambia’s total external debt drastically escalated to hit US $27.3 billion by the end of last year, up from US $19 billion by end of 2018.
The report, which comprises detailed breakdowns of what each borrowing country owes to official and private creditors by creditor country, discloses more detailed and disaggregated data on external debt than ever before, taking important strides in filling existing data gaps for low and middle-income countries.
Data compiled by the World Bank revealed that Zambia’s external debt stock actually stood at an unprecedented US $27.3 billion, of which public and publicly-guaranteed debt was recorded as US $11.1 billion, while the private sector debt, which included the US $3 billion worth of Eurobonds, stood at a cumulative total of US $14.7 billion.
A detailed breakdown revealed that the country’s total external debt stock skyrocketed to US $27.3 billion compared to just US $3.6 billion 10 years prior in 2009.
The external debt stock has progressively been climbing at a rapid pace, more than tripling from US $3.6 billion in 2009 to over US $11.7 billion in 2015.
But despite the rapid accumulation of external debt over the 10-year period, Zambia’s GNI dropped to just US $22.7 billion by the end of last year compared to US $26.6 billion in 2018.
GNI is a measure of a country’s income, which includes the net income received from abroad, whereas Gross Domestic Product (GDP) counts only income received from domestic sources.
The Zambian government’s principal repayments on the country’s external debt nearly doubled over the corresponding period under review, with data revealing that repayments on all its external debt stock jumped to US $1.7 billion last year compared to US $666 million in 2018 or just US $122 million 10 years prior back in 2009.
Zambia’s external debt stock also completely overwhelms neighbouring countries, Zimbabwe and Malawi, whose total external debt stock stood at US $12.3 billion and US $2.4 billion, respectively, according to the aggregated report data.
And the latest data showed that the total external debt stocks of low-income countries eligible for the Debt Service Suspension Initiative (DSSI) rose nine per cent in 2019 to US $744 billion, equivalent on average to one-third of their combined GNI.
Lending from private creditors was the fastest-growing component of the external debt of DSSI-eligible borrowers, up fivefold since 2010, the report reveals.
“Outcomes at the regional and country levels were divergent. Countries in sub-Saharan Africa recorded the fastest accumulation of external debt stock in 2019, on average 9.4 per cent, propelled by a comparable rise in the debt stock of the major regional economies, including Nigeria and South Africa and other borrowers across the region. Obligations to private creditors totaled US $102 billion at the end of 2019, ” read the report in part.
Earlier this year, the World Bank Assessment Report on Debt Transparency among International Development Associations (IDA) countries exposed Zambia’s lack of transparency on debt reporting.
The Assessment Report on the availability, completeness and timeliness of public debt statistics and debt management documents posted on national authorities website published on April 1, this year, revealed the lack of transparency on Zambia’s debt reporting and that there was partial information available about the country’s contracted loans.
Last month, the Zambia External Bondholder Committee rejected the Zambian government’s ‘Consent Solicitation’ request to suspend Eurobond interest debt repayments given the absence of clarity on government’s debt build-up.
And subsequently, on October 13, Secretary to the Treasury Fredson Yamba eventually conceded that Zambia was unable to pay its scheduled debt obligations despite the failure to reach an agreement with Eurobond holders late last month.
Yamba announced that the country will only be able to pay foreign exchange based debt to multilateral agencies and debt for a few priority projects that had an immediate economic and social impact.