Lawmakers in Africa’s first pandemic-era defaulter are considering a new law that sets strict limits on public borrowing and enhances transparency to avoid future debt troubles.
Under the Public Debt Management Bill, Zambian lawmakers will need to approve an annual borrowing plan prepared by a new debt management office. Total outstanding government borrowing won’t be allowed to exceed 65% of the previous year’s gross domestic product, and the cost of servicing external debt will be limited to 20% of the average annual recurrent revenues of the prior three years, according to the proposed legislation. Both limits will only apply five years after the new law becomes effective. Debt was 123% of GDP in 2021, according to the International Monetary Fund.