Zambia’s Domestic and Foreign Debt Levels Clarified by Financial Expert Noel Nkhoma

Regarding domestic and foreign debt, Nkhoma clarified that at the end of December 2023, domestic debt stood at K232.6 billion, compared to K193 billion at the end of December 2021. This increase in domestic debt has been used to finance the national budget, as Zambia currently has no access to international capital markets. As for foreign debt, it stood at US$14.57 billion at the end of December 2023, compared to US$13.04 billion at the end of December 2021.

In an effort to dispel various political narratives and false reports being peddled ‘by the opposition,’ Infinity Media Hub sat down with renowned economist and financial expert Noel Nkhoma, to provide clarity on the status of grants and loans received by the UPND government between 2022 and 2024.

First, let’s talk about the big numbers. According to Nkhoma, the International Monetary Fund (IMF) has so far disbursed a total of US$1.136 billion under the Extended Credit Facility (ECF) since August 2022. This includes an initial disbursement of US$187 million in August 2022, followed by subsequent tranches of US$187 million in April 2023, November 2023, and June 2024.

These funds have been utilized for Balance of Payments support and budget support, with 50% allocated to the Bank of Zambia to strengthen the country’s external position and the other 50% used to finance key budgetary expenditures such as the Constituency Development Fund, school grants, social cash transfers, and the procurement of drugs and medical supplies.

In 2023, the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) provided Zambia with US$391 million to support the country’s national HIV response, primarily through the purchase of HIV/AIDS drugs and the implementation of various HIV/AIDS programs and initiatives.

The European Union, on the other hand, has allocated €360 million under a seven-year Multi-annual Indicative Programme (MIP) for Zambia, covering the period from 2021 to 2027. These funds will be used for budget support in the health and education sectors, as well as to finance project preparation activities, such as feasibility studies and detailed designs in the health, education, and transport sectors. The EU has earmarked €30 million for disbursement this year as budget support.

Regarding the World Bank’s disbursements, Nkhoma clarified that contrary to assertions, the total disbursement in 2022 was not US$750 million. Instead, the World Bank approved and disbursed US$275 million for the First Macroeconomic Stability, Growth and Competitiveness Development Policy Financing (DPF), which was used to meet planned budget expenditures. Additionally, the World Bank approved US$210 million and US$300 million for the Zambia Devolution Support Programme and the Zambia Growth Opportunities Programme, respectively, with US$50 million and US$73.8 million released so far under these programs. In 2023, the World Bank released a US$125 million grant for the Second Macroeconomic Stability, Growth and Competitiveness Development Policy Financing (DPF-2), which was also used to finance planned budget expenditures.

The African Development Bank (AfDB) has also provided support to Zambia. In 2022, the AfDB’s African Development Fund disbursed US$14.7 million, while the AfDB itself disbursed US$68.6 million, primarily for the implementation of ongoing projects in the road, agriculture, energy, and water and sanitation sectors. In 2023, the AfDB’s African Development Fund disbursed US$21.5 million, and the AfDB disbursed US$42.7 million for similar projects.

So easily according to Nkhoma we can say these monies are being used to stabilize the economy, invest in public services, and lay ground work for future growth.

Of course, we will be watching and the public will be watching closely to make sure these funds are used effectively. But the facts show that Zambia is making progress, with the support of its international partners. The key is separating political rhetoric from economic reality.

Nkhoma’s detailed explanations aim to provide a comprehensive understanding of how the government has utilized the grants and loans received during this period, dispelling the various political narratives and false reports circulating in the public domain.

InfinityMediaHub

10th July, 2024