Zambian central bank has called on the Zambian government to pursue a prudent borrowing policy to avoid slipping back into unsustainable external debt.

The importance of implementing a prudent borrowing policy when contracting new debt and strengthening public debt management capacity could not be over-emphasized, the Post newspaper quoted Monday acting assistant director for balance of payments and debt of Bank of Zambia (BoZ) Emmanuel Pamu as saying in Chisamba, about 60 km from Lusaka.

"Government should continue pursuing appropriate policies with a view to consolidating on the gains so far attained for sustained economic growth, employment creation and poverty reduction," he said.

He said the macroeconomic performance has improved after the highly indebted poor countries initiative (HIPC) completion point and the multilateral debt relief initiative (MDRI) under which the southern African country qualified for debt cancellation.

There has been a reduction in the external debt service payments from the level that will have prevailed if the country has not attained the HIPC completion point.

It is projected for instance that Zambia will receive an average of 135 million U.S. dollars a year in debt relief over the next 20 years assuming the government reaches agreements on the delivery of debt relief with all its creditors.

This means that in 2006, instead of paying 233 million dollars, reaching HIPC would provide a relief of 96 million dollars, leaving a balance of 137 million dollars.

Source: Xinhua