October 1, 2003

Trade development / Mwanawasa critizises World Bank - HIPC

Zambia has recorded more trade with Southern African Development Community (SADC) countries than with Common Market for Southern and Eastern Africa (COMESA) countries. According to the just released Central Statistical Office publication, The Monthly, Zambia recorded more trade with SADC countries, especially South Africa, than COMESA from January to August 2003 this year.

South Africa is the largest single source of Zambia's imports, accounting for more than 50 per cent of the total imports during the period. Some of the major items imported from South Africa are machinery, mechanical appliances and vehicles. Other items include mineral fuels, plastics and plastic products, iron and steel, electrical machinery and fertilisers.

The pattern for exports is the same as that of imports with Zambia exporting most of her goods to countries within SADC compared to countries within COMESA. Meanwhile, Zambia has continued to experience a trade deficit since January 2003, with a total trade deficit of 70 per cent recorded in the first half of the year.

The months of January to April experienced fluctuations in the levels of trade deficits while the country experienced sustained decline in the trade deficit between the months of May and June. The country has continued to experience trade deficit into the second half of the year.

Though the month of July registered the lowest percentage trade deficit of 20 per cent, August recorded a break in the declining trend, with an increase in the trade deficit registered at 58 per cent. Meanwhile, The Monthly indicates that the food basket recorded some significant increases in the cost of food for a family of six during the months of August and September.

In a separate development, President Mwanawasa in addressing the third Tokyo International Conference on African Development (TICAD III), complained that donors have withdrawn assistance to Zambia for failing to meet one HIPC benchmark: "Zambians are being made to suffer due to the withdrawal of donor assistance to the country on account of the country's failure to meet one benchmark under the Highly Indebted Poor Countries (HIPC) initiative. But failure to meet one benchmark should not be the basis of withdrawing assistance to Zambia after all the successful achievements we have made. We cannot reach the HIPC completion point which was scheduled for December this year due to unforeseen circumstances."

President Mwanawasa explained that the implications of this failure meant that Zambia would not get the US $3.8 billion debt cancellation that was anticipated out of the country's unsustainable external debt portfolio, which is over US $7 billion. He said the consequences of shifting the HIPC completion point meant that Zambia would delay or slow efforts of implementing the Poverty Reduction and Growth Facility (PRGF). President Mwanawasa further showed that despite the progress that Zambia had recorded over the recent years, the country was still faced with many problems such as tremendous difficulties in executing the Poverty Reduction Strategy Paper (PRSP) effectively due to the HIV/AIDS pandemic, high poverty levels, the high debt burden which is both external and local, insufficient foreign investment and the delayed implementation of the PRGF. (The Post, Lusaka)

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