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Zambia Shuttering Projects to Avoid Debt

FILE PHOTO: A truck exits the mine after collecting ore underground at the Chibuluma copper mine in Zambia. Taken 1.17.2015

Zambia is cancelling projects financed by commercial loans to reduce the risk of accumulating more non-concessional debt, the ministry of finance said.

Zambia is cancelling projects worth an estimated $2.1 billion, the medium-term budget plan published by the ministry of finance late on Saturday showed, although it gave no details.

The decision to axe the projects is part of a broader debt-restructuring process, it said, adding that it expected bilateral creditors would provide adequate financing assurances for approval of an IMF program being discussed.

The government was also in the process of changing the law to increase parliamentary oversight on borrowing, it said.

A treasury spokesperson did not immediately respond to a request for a breakdown.

Zambia's economic growth in 2022 is expected to slow down to 3.1% from 3.6% recorded in 2021 mainly due to the expected reduced output from the agricultural sector.

The economy of Africa's second-largest copper producer is forecast to grow 4%, 4.1% and 4.4% in 2023, 2024 and 2025, respectively, the ministry's plan showed.

The 2023-2025 medium term macroeconomic objectives also include keeping inflation down in single digits, averaging 9.2% in 2023, 8.2% in 2024 and 7.3% in 2025, it said.

The government also plans to maintain reserves at three months' worth of import cover, it said.