By FELIX NKINKE
ZAMBIA’s rising external debt, which currently stands at US$3.2 billion, is still sustainable, but if not checked, could erode investor confidence in the country’s economy, analysts observe.
University of Zambia lecturer and economist Chrispin Mphuka said there is need for the country to slow down on borrowing especially that Zambia is now accessing high interest loans on non-concessional terms.
“Zambia still needs to borrow money to enhance various developments but there is need to control the rate at which we are borrowing. There is a danger if we allow this debt to keep rising as it might affect investment inflow,” Dr Mphuka said in an interview recently.
He said national growth depends on the level of investments flowing into the economy and this also on the economic climate prevailing in the country at a particular time.
Dr Mphuka said investor confidence in the economy is imperative as it spurs national growth.
“If an economy is growing, it cannot affect investment coming into the country. With a sustainable external debt stock, we still can attract foreign direct investment,” he said.
Dr Mphuka, however, said Zambia risks to fall back into the debt trap of the early 1990’s if no adequate measures are sought to check the rising external debt stock.
In a separate interview, a business and investment analyst Cuthbert Malindi said the rising debt stock could disadvantage Zambia to be labeled as a risk investment destination.
“Investors or lenders may find it difficult to invest or do business in a country they perceive to be a risk investment destination. Also, a country with a high debt portfolio cannot carry out development projects as resources would mostly be channeled to debt servicing,” he said.
He said while borrowing cannot be avoided there is, however, need to demonstrate discipline and initiate debt control systems to ensure that borrowing is kept within sustainable levels.
453 total views, 3 views today