May 8, 2003

ZAMBIA: Germany cancels Euros 187m of Zambia's debt

Germany has cancelled 100 per cent of Zambia's debt amounting to Euros 187 million, approximately K1 trillion, with a strong call for the freed resources to be channelled to poverty reduction programmes.

Speaking during the signing of an agreement to reduce Zambia's debt at the ministry of Finance in Lusaka yesterday, German ambassador to Zambia Erich Kristof said the amount represented 100 per cent cancellation both in principles and interests. 'It is our sincere hope and expectation as well that the Zambian Government will use this money to implement poverty reduction projects as laid down in the national Poverty Reduction Strategy Paper (PRSP). Germany hopes that soon both the implementation of PRSP projects and the monitoring of the same will be put on a sound footing to prevent the misuse of funds by corruption and to allow the people of Zambia feel the impact of PRSP,' Dr Kristof said.

Under the agreement, Zambia is exempted from making debt service payments to Germany during the consolidation period of four bilateral agreements of 1991, 1993, 1997, 1999. The German government's gesture is in response to the Cologne initiative of providing a sustainable solution to the foreign debt haunting the Highly Indebted Poor Countries (HIPC).

Earlier, Zambian Finance Minister Emmanuel Kasonde said the savings from the arrangement had been channelled to poverty reduction programmes in accordance with the PRSP and the Transitional National Development Programme (TNDP). He thanked Germany for its continued support to the people of Zambia.

Meanwhile, Kasonde has appealed to Germany to refund the $3.7 million already paid in debt servicing in 2001-2003. Zambia's external debt amounts to around US $6.5 billion. Observers have pointed out that the country's debt servicing obligations exceed annual spending on health, education, water and sanitation and other welfare projects combined. (The Times of Zambia, Ndola)

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