Zambia will raise kwacha loans, to try tilt funding in favour of the local market
Lusaka/Johannesburg — Zambia will not sell dollar debt in 2018 as it focuses on raising kwacha loans and increasing tax collection, its finance minister, Felix Mutati, says. The government plans to borrow 11.2-billion kwacha ($1.2bn) from the domestic market in 2018, more than triple the amount in the 2017 budget. This is part of its strategy to tilt funding in favour of the local market, after external debt bulged to $7.5bn by mid-year from $2bn at the end of 2011. Zambia has tapped the Eurobond market for $3bn since. "When you look at the cost parameters of foreign-denominated instruments of borrowing and you add the exchange-rate risk, you find that you are better off borrowing on the local market," Mutati said in an interview in Lusaka, the capital, on Thursday. The shift toward local borrowing is due to "purely issues of cost," he said. Debt sustainability is at the core of Zambia’s discussions with the International Monetary Fund (IMF) over a $1.3bn loan and economic programme...
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