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Zambian President Hakainde Hichilema delivers his national observation as part of the Kingdom's Leaders' Summit on the UN Climate Change Convention (COP26) in Glasgow, Scotland, Great Britain, November 1, 2021. Andy Buchanan/Pool via REUTERS
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LUSAKA, September 9 (Reuters) – Zambia's government expects its economic system to grow 4% in 12 months in the medium term and is focused on resolving the country's debt disaster, President Hakainde Hichilema said on Friday.
According to Zambia's financial institution, the economic climate grew by 3.6% in 2021 after a contraction of 2.8% in 2020, when Zambia became the leading African country to default on its sovereign debt throughout the COVID-19 pandemic.
“We put our economic system on a favorable growth trajectory last year and projected the economic climate downwards from this terrible boom,” Hichilema informed parliament, and he forecasts economic expansion of 4% in the medium term.
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“Fiscal management was excessively precarious and became characterized by misallocation of resources and imprudent borrowing, which increased the cost to the debt bearer that unfortunately followed… a debt default,” said Hichilema.
Despite this fact, the government managed to stabilize the economic system within a year, the president stated.
“"We have been keeping inflation down on a regular basis," Hichilema stated.
Inflation stood at 24.4% in August 2021, but fell to single digits of 9.8% in August 2022, according to the fact-checking firm Zamstat.
Hichilema noted that this put Zambia “on track to achieve our centered inflation price of 6-8% for the mid-term period”.
The forex kwacha has become stable and foreign exchange reserves have increased, he said.
The Southern African nation is seeking US$8.4 billion in “cash debt relief” from 2022 to 2025, the Overseas Economic Fund pointed out on Tuesday in a record long-awaited period, adding that it needs to reduce its debt-to-income ratio to 14% by 2025, after which it must maintain that phase on average until 2031, compared to 61% now.
At the end of August, the international financial fund accepted a US$1.3 billion mortgage for three years for Zambia, a vital step in the Southern African country's quest to restructure its debts. [examine extra]
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Reporting via Chris Mfula; Editing using Bhargav Acharya and Anait Miridzhanian; Editing by James Macharia Chege
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