LUSAKA (Reuters) - Zambia’s finance minister urged South African firms to invest in roads and power plants in Africa’s No.2 copper producer after it suspended borrowing indefinitely, slowing down the accumulation of new debt amid worries about the risk of distress.
The International Monetary Fund rejected Zambia’s borrowing plans in February, saying its debt load was harder to sustain. Freezing new debt could clear the way for Zambia to agree a $1.3 billion loan agreement with the IMF.
The South African government and banks in Africa’s most industrialised economy have drafted a plan to support infrastructure projects in Zambia with an initial pledge of $1.2 billion, officials in Lusaka said.
Finance Minister Margaret Mwanakatwe told South African delegates at a trade and investment forum that Zambia had huge investment opportunities in transport and energy sectors.
“It is actually opportune that you have come here to talk about investment in infrastructure,” Mwanakatwe said, calling for private investment in infrastructure projects for growth.
“When we took a decision as cabinet to stop borrowing any further for a good two-year moratorium, it was because we realised that continuing to borrow was unsustainable,” she said.
Reporting by Chris Mfula; Editing by James Macharia and David Evans