LUSAKA (Reuters) – Zambia should step up its implementation of austerity measures to rein in soaring debt and stabilize the economy, newly appointed finance minister Bwalya Ng’andu said on Tuesday.

Zambian President Edgar Lungu abruptly fired Margaret Mwanakatwe, his former finance minister, on Monday, appointing in her place the respected deputy head of the central bank, who said he might further delay a sales tax designed to rebalance its economy.

The International Monetary Fund has repeatedly warned that Zambia’s high debt and shrinking foreign exchange reserves leave its economy vulnerable.

Ng’andu said in a statement issued by the ministry of finance that Zambia needed to narrow the gap between commitments made in implementing austerity measures and action taken.

External debt rose to $10.05 billion at the end of 2018, compared with $8.74 billion a year earlier. Zambia is trying to shrink a fiscal deficit that amounted to 7.5% of gross domestic product last year.

“The current challenge is that we have agreed on (austerity) measures over the last few years, but we need to step up on our action,” Ng’andu said.

Ng’andu said the government needs to take specific steps toward sustained economic stabilization and growth.

With current policies, Zambia’s growth is forecast to weaken to 2.5 percent this year from 3.7 percent last year and remain below 3 percent in the medium term, the World Bank said on Tuesday.

While inflation remained within the central bank’s target range of 6-8 percent in 2018, mounting price pressures may lead the central bank to tighten monetary policy, the lender added.

“Zambia needs to undertake bold fiscal and structural policy reforms to preserve macroeconomic stability, boost business and market confidence, and improve growth prospects in 2019 and beyond,” the World Bank said.

Ng’andu’s predecessor, Mwanakatwe, said in May that Zambia had delayed the receipt of loans totaling $2.6 billion contracted last year in order to rein in its soaring debt.

The 25 loans had been in the pipeline from 2016 to 2017 but only reached financial closure in the first and second quarters of last year, she said.

The government also plans to delay some projects and cancel others in order to cut down on expenditure and debt.

Ng’andu said effective expenditure control, debt management and enhanced domestic revenue collection were critical to boost Zambia’s economy.

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