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By Shapi Shacinda

LUSAKA (Reuters) – Zambian cabinet ministers will no longer be allowed to agree new loans in a bid to help keep a lid on borrowing after data showed foreign debt had jumped to $1 billion, the finance minister said on Thursday.

Ng’andu Magande told Reuters foreign debt at the end of March had doubled after falling to $502 million in June 2006 on extensive debt relief from the International Monetary Fund (IMF), the World Bank, the African Development Bank and Western donors.

Debt rose due to new loans Zambia signed prior to an agreement for a debt write-off with foreign lenders in 2006, but which were delivered after the debt write-off as well as a reluctance by countries such as Russia and Brazil to cancel outstanding debt.

“The foreign debt is calculated at $1 billion, not because we have borrowed massively but due to the fact countries like Brazil have not sat down with us to cancel debts under the HIPC agreement,” he said in an interview.

Magande said apart from a $39 million loan Zambia signed with China for road construction equipment, he had not contracted fresh loans since the 2006 debt relief.

Measures stopping ministers from agreeing new loans would be announced next month.

Several cabinet ministers signed tentative loan arrangements with lenders when on trade missions abroad, without his authority. he said. The Treasury was then obliged to sign off on the deals.

“No one is allowed to sign for new loans on impulse (from next month), we have to reflect on previous (indebtedness).

“The problem is that we are used to a system that has been in existence for more than 50 years, whereby ministers travelling abroad sign for (loans) without the authority of the ministry of finance. But I am saying that is no longer the case.”

According to a three-year lending programme signed with the IMF in May, the government had pledged to be prudent in taking on new borrowing.

“To maintain debt sustainability, the (government) is finalising a debt management strategy … which will provide a clear framework for borrowing,” Magande said in a letter to the

IMF.

The country would rely more on tax, including expected extra revenue from new mining taxes introduced this year to finance new projects, he told Reuters.

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