LUSAKA, (Reuters) – Zambia’s central bank left its main lending rates at 9% on Wednesday as inflation slows. This was stated by Governor Denny Kalyalya in a press conference.

Kalyalya however stated that there were risks of inflation due to a projected shortage in grain supplies from some neighboring countries, and an expected decrease in domestic surplus. This would likely push prices higher.

He said that inflation is expected to reach 12.5% by 2022, and then fall to 8.9% by 2023. Inflation was at 11.5% as of April, compared to 13.1% as of March.

Kalyalya stated that International Monetary Fund support is key for resolution of foreign debt following the pandemic-era sovereign default of the south African nation in 2020. The country was struggling to pay 120% GDP and had a debt burden of over 12,000%.

Official government data shows that the country’s total debt at 2021 ended up at $31.74 billion, with $17.27 million of this amount external.

Kalyalya stated that although the official creditor committee of Zambia, primarily made up of members from the G20, had been established but no discussions had begun on restructuring the country’s debt.

He said that real GDP will grow at 3.5% per year in 2022, before rising by 3.6% and 3.9% respectively in 2023, 2023, 2024.

Kalyalya stated that the financial, insurance, information, and communication sectors, along with education and mining, are all expected to be driving growth during this time.

According to him, for 2022 the fiscal deficit will be reduced to 6.7% as a percent of GDP, from 9.0% in 2021.

He said that this projection was supported by enhanced revenue mobilization and rationalisation, bolstered by debt restructuring under G20 Common Framework.