Zambia’s expenditure is expected to rise by approximately 20 billion kwacha ($1.11 billion) this year as the local currency weakens, piling more pressure on a nation already struggling with huge debt, President Edgar Lungu said on Thursday.
External debt service will rise by 8.7 billion kwacha because of a sharp fall in the currency, Lungu said in a national address.
Zambia has $3 billion of Eurobonds outstanding and owes $2 billion to commercial banks, $2 billion to the International Monetary Fund and World Bank, and a further $3 billion to China.
The kwacha has weakened more than 28% against the U.S. dollar so far this year, with the central bank in May attributing the depreciation to macroeconomic challenges associated with debt service and debt levels.
Economic activity in Africa’s second-largest, copper-producing nation has also been hurt by the coronavirus crisis.
Lungu announced the reopening of all international airports to revive tourism after closures in March hit the sector.
Zambia has registered 1,497 coronavirus cases and 18 deaths, Lungu said.
Zambia is reviewing its 2020 budget after a reduction in revenue as a result of the coronavirus pandemic and other factors, Secretary to the Treasury Fredson Yamba said.
Zambia’s budgeted revenue is estimated to fall short of target by close to 20% as a result of economic adjustments due to COVID-19, the ministry of finance said in April.