Reversing Zambia’s High Risk of Debt Distress
With about a year into implementation of the 2017 to 2019 Medium Term Debt Strategy, this paper gives a synopsis of the strategy. It delves into each of the pillars of the strategy and analyses the pros and cons of each and assesses whether the pillars will achieve the intended results. Particularly we ask: i) whether the increase in the share of domestic debt to 60% is tenable; ii) the challenges Government may face to reduce the share of external debt to 40%; iii) how to strengthen debt management capacity and improve institutional capability to ensure debt sustainability. To do this, the paper firstly gives some background on why debt matters for Zambia and how it has been previously managed. Thereafter, the paper analyses the pillars within which the MTDS is set and showcases the strengths and weaknesses of the pillars of the Strategy. In doing this, we try to understand whether the choice of strategy will help return Zambia to a trajectory of lower debt distress. Lastly, the paper concludes and presents recommendations that will help to mitigate the risks embedded in the debt strategy and help reverse Zambia’s high risk of debt distress.