CUTS decries high debt costs

HIGH debt servicing costs are weakening the economy because Government is spending more money on interest payments, the Consumer Unity and Trust Society (CUTS) has warned.

Government currently owes US$10.05 in external and K58.3 billion domestic debt respectively.

CUTS in its publication called #DebtConcernsMe circulated by its communications and advocacy specialist, Njavwa Simukoko, warned that high debt levels left Zambia in a difficult position.

Mr Simukoko said high debt servicing costs weakened the economy by forcing the Government to spend money on interest payments instead of national development.

Mr Simukoko explained that most areas were significantly impacted, as money spent on interest could not be spent on these sectors.

He said lack of investment in these services had a long-term impact on the social well- being of Zambians.

“A lot of the country’s debt is contracted in foreign currency, which means if the kwacha weakens due to external factors, such as the copper price falling unexpectedly, the amount that Zambia owes in real terms will increase significantly.

“High debt levels also leave the Government unable to pay its obligations to companies and contractors who have been engaged for various development projects: this is called payment arrears and at the moment Government owes K13.9 billion,” Mr Simukoko said.

The impact of high debt levels, he said, should concern everyone as they were affected.

High debt levels leave the Government unable to pay its obligations to companies and contractors who have been engaged for various development projects