October 10, 2003

Debt Relief Stays

Zambia will continue receiving limited debt relief from the World Bank despite not reaching the Highly Indebted Poor Countries (HIPC) initiative completion point. World Bank resident representative Ohene Nyanin said in Lusaka that the debt relief, which is to go on until 2007, would however be limited and would be only a third of the total support. The interim support would reach US$700 million by December representing 84.2 per cent of the debt service due to the bank.

Addressing a meeting organised by the Lusaka Press Club, Dr Nyanin said the Zambian Government had about six months to make amends to honouring its commitments after which the decision point document would become irrevocable.

Zambia was due to reach completion by the end of December 2003 but was derailed by Government decision to pay new salaries and housing allowances to civil servants contrary to agreements under the International Monetary Fund (IMF) Poverty Reduction Growth Facility (PRGF).

The country's external debt was to be reduced by US$2.5 billion representing 62.6 per cent of the total external debt in net present value. "The delay in Zambia reaching the completion point does not mean Zambia does not receive relief. This is going on but the only difference is that the relief is limited. If Zambian Government reaches completion point, debt relief becomes irrevocable," Dr Nyanin said. He dismissed the notion that the conditionalities attached to HIPC were meant to punish poor countries by claiming that they were in fact meant to help in the alleviation of poverty and improve living standards of the majority of the people. (The Times of Zambia, Ndola)

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