Zambia’s $8.7 billion foreign debt has not been understated and those saying it is higher should produce evidence, the ministry of finance said on Wednesday, following market speculation that the debt could be more than double the official figure.
Zambia, Africa’s second-biggest copper producer, has held talks with the International Monetary Fund over an aid programme but the IMF rejected its debt management plans in February.
Finance Ministry spokesman Chileshe Kandeta said in response to a query that the government has evidence showing that the debt amounts to $8.7 billion.
“If anyone has creditor/debtor details indicating that it is higher, let them produce empirical evidence,” Kandeta said, referring to the debt.
Gregory Smith, Renaissance Capital’s sovereign debt strategist, said in an April report the government appears unwilling to reduce its new loans and infrastructure contracts.
“Since Mozambique’s hidden debts became apparent there has been concern about where else this might happen. Based on several online media stories, Zambia has been singled-out as a potential source of hidden debt,” Smith wrote in the report.
“But there is no hard evidence to suggest the probability is higher there than for other sovereigns of similar credit ratings.”
Debt-ridden Mozambique, one of the world’s poorest countries, is struggling to repay loans of more than $2 billion that were not approved by parliament.
The discovery in 2016 of the undisclosed loans prompted the International Monetary Fund and foreign donors to cut off support, triggering a currency collapse and leading to a default.
Zambia’s economy is expected to grow by more than 4 percent this year helped by the mining, agriculture and construction sectors, Finance Minister Margaret Mwanakatwe said last week.
Mwanakatwe said the government would complete a detailed debt sustainability exercise within two weeks before re-opening discussions with the IMF.
Zambia will rearrange loans from Chinese companies and instead look to borrow directly from the Asian giant’s government in a bid to satisfy IMF conditions and unlock a potential $1.3 billion loan from the multilateral lender.