Zambia’s external debt has increased to USD 3.13bn as of end-September from USD 3.08bn as of end-2012, Zambia Daily Mail reported, quoting Finance Minister Alexander Chikwanda. Just two years ago, before the current Patriotic Front government entered into force, the country’s foreign debt stood at slightly over USD 500mn. In September 2012, Zambia sold a USD 750mn debut 10-year Eurobond with a yield of 5.625% after attracting bids worth more than USD 11bn.

Zambia’s stock of domestic debt has increased by 22.5% so far this year to ZMW 18.52bn (EUR 2.58bn) as of end-September 2013. Chikwanda has explained that the growth in the government’s borrowing is related to its efforts to grow the economy. He has also said that the government would aim to borrow some USD 2bn in 2014 to support growth, of which about 70% would be borrowed from foreign markets.

Zambia is expected to raise a syndicated loan of USD 250mn from a consortium of international and local lenders to fund infrastructure projects this month. The loan will be Zambia's first syndicated facility since 1984. The copper producing country, rated B+ by Fitch and S&P and B1 by Moody’s, may issue another Eurobond at the beginning of 2014 at the earliest.

Chikwanda has said that the budget deficit would surge to 8.5% of GDP for 2013, well above the government’s initial target of 4.5% of GDP due to the abolition of fuel and maize subsidies and the hike in public sector wages. The budget gap should shrink to 6.6% of GDP for 2014. The government targets a GDP growth of above 7% next year, driven mainly by the mining, construction, transport and communication sectors. The International Monetary Fund (IMF) has forecast the country’s economy to expand by 6% this year, slowing from 7.2% in 2012, largely due to lower agricultural production. But an expected growth in copper demand by China would support the economy of Zambia, which is Africa’s biggest copper producer.