Why we need to understand the impact of domestic debt to develop Zambia

Going by today’s debt arrears repayment inertia, it would take approximately 13 years to clear the current domestic debt!

Lusaka, Oct. 2 – Does an average Zambian understand that to solve the current economic hardships, we need leadership that must understand the impact of domestic debt and arrears on Zambia’s economy?

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1. Domestic debt in Zambia has increased by over 120% in just 2 years, totaling K96 billion in 2021 to K214 billion in 2023.

2. High government borrowing crowds out the private sector, as banks and financial institutions prefer lending to the government rather than the private sector.

3. Zambia’s high interest rates are a result of government borrowing, which limits lending to the private sector.

4. Domestic arrears owed by the government to suppliers of goods and services have increased from K24 billion in 2021 to K78 billion in 2023.

5. The government’s failure to pay private companies for their services hinders economic growth and reduces the circulation of money.

6. Only K6 billion has been allocated in the budget to pay off domestic arrears, which means it would take approximately 13 years to pay back all the owed amounts.

7. Delayed payment by the government negatively affects businesses that may have to wait years to receive payment for their goods and services.

8. The government’s delinquency in paying private suppliers has a significant impact on the overall economy due to its prominent role.

9. It is challenging to expect economic growth when the government is not fulfilling its payment obligations to private companies.

File Photo: Minister of Finance and National Planning, Hon. Dr Situmbeko Musokotwane, MP, at the National Assembly, Parliament Building on Friday, 29th October, 2021.

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