Zambia's domestic debt has increased by 40 percent from last year's 6.2 trillion kwacha (1.8 billion U.S. dollars) to 8.7 trillion kwacha (2.5 billion dollars) as at the end of March this year, a senior government official said in Lusaka Wednesday.

Finance Minister Ng'andu Magande said the increase in domestic debt was attributed to deficit financing by government and continued accumulation of arrears on suppliers and pension contributions.

Early this month, Magande said the Zambian government was committed to clear the debt owed to contractors and suppliers of goods and services to government ministries and departments countrywide.

The announcement came shortly after the World Bank has decided to write off 2.7 billion dollars of Zambia's foreign debt under the Multilateral Debt Relief Initiative (MDRI) after the country reached the Heavily Indebted Poor Countries (HIPC) initiative completion point in April 2005.

The debt cancellation took effect on July 1, leaving the poor southern African country's foreign debt at 502 million dollars only.

Magande said the government has this year committed a total of 778 billion kwacha (222 million dollars) for payment of interest on maturing government securities.

He said efforts were also being made to comply with the terms of contracts for roads and other contracts through the expenditure control system.

Source: Xinhua