Zambia acquired a Euro bond of US$2 billion which will be used to fund its budget deficit which has recently increased due to a fall in the global copper market. This is considered to be one of Africa’s largest international bonds. PRIVATE Sector Development Association (PSDA) chairperson Yussuf Doldia says the recently acquired Eurobond can only yield better results if channelled towards social economic infrastructure.
Mr. Doldia said channelling the Eurobond towards social economic infrastructure will bring about economic development adding that this can help service the debt.
Mr. Doldia said government borrows in order to finance its own program.
He explained that from the previous money the government has borrowed so far, some of it was channelled to ZESCO and TAZARA but the bulk of the money has not been accounted for in terms of infrastructure.
“It becomes dangerous when huge sums of money go towards consumption because we are likely to have a situation where the country has a huge debt with an economy that is not growing," he explained.
Mr. Doldia further explained that at the end of September 2014, Zambia's total debt amounted to about US$7.7 billion which was a combination of domestic and foreign debt.
"In 2015, the national budget had an extra borrowing of about $1.6 billion dollars which will take the debt to just over $9 billion by the end of 2015," he projected.
Mr. Doldia said the 2015 budget serviced the interest of debt with a budget allocation of K5.3 billion which is almost the same as the money that has been budgeted for infrastructure development amounting to K5.6 billion.
He said the debt was competing with huge infrastructure development sectors of the economy and is making it expensive to develop the economy because there is a lot of money being spent on servicing debt as compared to money being spent on improving the economy.
Zambia acquired a Euro bond of US$2 billion which will be used to fund its budget deficit which has recently increased due to a fall in the global copper market. This is considered to be one of Africa’s largest international bonds.