Zambia is facing tough questions over its foreign-debt levels from investors who think the real number may be more than double the government says it is. Lenders, including Nomura Holdings, believe the state hasn’t come completely clean on how much external borrowing it’s undertaken. This is raising concern that the country may be headed for a similar situation to neighbouring Mozambique, where hidden debts led to default, and the government is seeking to restructure. "Zambia is in somewhat of a serious predicament of having politically connected additional ‘unknown’ loans," Peter Attard Montalto, head of emerging Europe, Middle East and Africa economics at Nomura International in London, said in an e-mailed note on March 27. "The hidden-loan problem, in our view, is likely one of short-term external debt that is at least as big as known external loans and external bonds combined." For Zambia, Africa’s second-biggest copper producer, external debt is key. It’s been the main stumblin...

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