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Zambia resolves to avoid debt trap

Feb 05 2013 13:21 Reuters

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Lusaka - Zambia will be careful not to fall back into unsustainable levels of debt as state-owned firms look to borrow from international markets to invest in infrastructure projects, Deputy Finance Minister Miles Sampa said on Tuesday.

The fast-growing nation's debut $750m bond was 15 times oversubscribed last year and state-owned companies now want to ride on the goodwill to borrow, Sampa said.

State-owned power company Zesco plans to borrow $2bn from investors in Britain and the United States to build new power stations. 

The Road Development Agency is also planning a $1.5bn bond and state railway operator Zambia Railways and a municipality also want to issue $500m bonds, Sampa said.

"These are very healthy plans because the companies need to expand but we will ensure that everything remains within our debt structure," Sampa said.

"Ultimately they all need to get our guarantee and the government will only do so when companies provide convincing plans on how the money will be paid back," said Sampa.

International lenders - including the International Monetary Fund and the World Bank - wrote off about $7bn of Zambia's debt in 2006.

Since then, Africa's top copper producer has posted annual economic growth in excess of 6%.
 

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zambia  |  debt  |  borrowing  |  infrastructure projects
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