Zambian President Edgar Lungu has ordered several austerity measures, including a ban on the issuance of letters of credit (L/Cs) to some state-owned enterprises, in an attempt to address Zambia's sharply deteriorating debt crisis.

Foreign debt rose from US$8.7 billion to US$9.3 billion between March 2017 and 2018.

Government statement

A statement addressing Zambia's fiscal and debt challenges says the government has undertaken to implement several measures and will, "cease the issuance of letters of credit and guarantees to state owned enterprises that are technically insolvent until their balance sheet challenges are resolved."

The statement also says the government will cancel some existing loans, terminate the financing for projects not yet 80 per cent complete and reduce ministerial travel.

IMF support

The austerity measures are also aimed at helping Zambia revive its negotiations for a US$1.3 billion loan agreement with the International Monetary Fund (IMF).

Negotiations have stalled since February when the IMF rejected Zambia's borrowing plans.

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