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Zambia’s Rising Debt Is Investment for the Future, Minister Says

Zambia's Rising Debt Is Investment For the Future, Minister Says

(Bloomberg) -- Zambia’s increasing debt load is an investment for the future and shouldn’t be a cause for concern, the nation’s Finance Minister Margaret Mwanakatwe said.

“In the main it is infrastructure development, Zambia is vast,” she said in an interview with Bloomberg TV in Washington on Friday. “The opportunity is out there. If I don’t put a road there, how do I harness the potential that is there. Debt, much as it looks high, it’s a debt for the future.”

Zambia’s external debt climbed to $10.05 billion by the end of last year from $8.74 billion a year earlier as the government continued to spend on building programs despite warnings from the International Monetary Fund and ratings companies that the burden is becoming excessive. Zambia, Africa’s second-biggest copper producer, has failed to persuade the IMF to sign off on a package to boost its budget.

A decline in reserves to less than two months’ import cover is also not a worry, Mwanakatwe said. “We have mitigating actions that will improve falling reserves.”

Gross reserves fell to $1.59 billion, the lowest level in more than a decade, at the end of December, according to the finance ministry.

--With assistance from Ana Monteiro, Matthew Hill and Taonga Clifford Mitimingi.

To contact the reporters on this story: Francine Lacqua in London at flacqua@bloomberg.net;Tom Keene in New York at tkeene@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, Gordon Bell, Rene Vollgraaff

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