Q FM Africa's Modern Radio
The Economics Association of Zambia (EAZ) says Zambia faces the danger of having a growing external debt should it continue having budget deficits.
EAZ president Crispin Mphuka says this is particularly that the cost of servicing external debt is growing in Kwacha terms given the currency’s depreciation.
Dr. Mphuka notes that while it is good that in the 2016 national budget government has placed a cap on domestic borrowing, the EAZ has also seen the need to send credible positive signals to the market.
He says government should do so keeping in mind that there are market players and agents that are always observant of how the country’s economy is performing.
Dr. Mphuka states that if therefore government stays on course with its commitment to reduce the deficits, this will be a good signal to the market that the economy is still in a health state.
He has also noted the need for Zambia to begin planning ahead of the already known effects that arise from global economic shocks such as fluctuating commodity prices.
He has further warned that Zambia risks falling into the unsustainable debt trap if fiscal consolidation measures outlined in the 2016 national budget are not attained.
Dr. Mphuka was speaking in Lusaka this morning during a 2016 national budget analysis breakfast meeting organized by the EAZ in partnership with the Zambia Institute for Policy Analysis and Research (ZIPAR).
Earlier, ZIPAR Executive Director Pamela Nakamba-Kabaso reiterated the need for Zambia to walk the talk in diversification.
Dr. Kabaso says there is no other better time than now when lessons have already been learnt of the need to diversify the economy away from copper.