Zambia's President Edgar Lungu. Photo: Reuters

LUSAKA – Zambia has delayed the receipt of loans totalling $2.6 billion (R37bn) contracted last year in order to rein in its soaring debt, Finance Minister Margaret Mwanakatwe said on Friday.

Zambia’s external debt at the end of the first quarter of this year had increased to $10.178 billion from $10.05 billion at the end of 2018, Mwanakatwe told business leaders.

The debt pile had pierced the $10 billion level after jumping from $8.74 billion at the end of 2017.

Mwanakatwe said the loans approved last year covered infrastructure, energy, agriculture, health, education and defence.

The 25 loans had been in the pipeline from 2016 to 2017 but only reached financial closure in the first and second quarters of last year, she said.

“We are going to manage disbursement to be able to have a sustainable debt profile going forward,” Mwanakatwe said, without stating how long disbursement would be delayed.

The International Monetary Fund (IMF) has repeatedly warned Zambia is struggling with high debts and shrinking foreign currency reserves.

Zambia’s 2018 fiscal deficit stood at 7.5 percent of gross domestic product (GDP), higher than an earlier government projection of around 7 percent.

Mwanakatwe said Zambia’s foreign reserves dropped to $1.43bn at the end of February 2019 from $1.56bn at the end of 2018.

Zambia’s GDP growth in 2019 would fall below 3 percent from 3.7 percent last year due to adverse weather conditions which would impact agricultural production and the energy sector.