Mr Nkoma said the country’s economic future is very gloomy as all economic fundamentals are now in bad shape.
He also stated that Zambia may also struggle to make interest repayments on the Eurobonds which he said have become expensive.
Mr Nkoma said the country will also have to cut its social spending in the short to medium term in order to service the debt.
Mr Nkoma who is also former Economic Association of Zambia President was speaking when he featured on a live My Top Ten radio programme on Hot FM.
“It’s a gloomy picture, we haven’t managed fiscal policy that reflects of discipline and responds in a manner that addresses the challenges the country is facing,” Mr Nkoma said.
He added, “In the economic sense, the country is heading towards a very strong headwind.”
“I was saddened to read a report from the Standard Chartered Group which anticipates that the country might default on its first Eurobond repayments but for me I see us even defaulting on the second and third repayments.”
Mr Nkoma said the consequences of defaulting on the Eurobond repayments are too ghastly to contemplate at this stage.
He said even thinking of setting up a Sinking Fund is a bit too late because Zambia is living on borrowed funds.
“We are living on borrowed money and time, you only set up a Sinking Fund which is basically a saving fund and you only save if you have a surplus but where is that surplus going to come from?”
“Even for interest repayments, we may struggle to meet those. We will be forced to borrow from Tom to pay Peter.”
Mr Nkoma said there needs to be change of attitude in the way Zambia manages its fiscal policy which in turn drives monetary policy.
“We need to start implementing austerity measures right from the top. We are still so opulent and yet we have a huge deficit. Government need to set the tone first in implementing austerity.