January 10, 2004

World Bank: Zambia won't pay more for reaching HIPC

The World Bank has dispelled insinuations that Zambia would pay more on debt servicing once the country reached the Highly Indebted Poor Countries (HIPC) initiative completion point. In a statement, World Bank country manager for Zambia Ohene Nyanin explained that the HIPC initiative aimed at giving "comprehensive debt relief to the world's poorest and, most heavily indebted countries." He added that under the initiative, all creditors committed debt relief to be delivered once a country met all the conditions set for reaching the completion point. He explained that Zambia's reaching the HIPC completion point meant "the debt relief as agreed in the decision document becomes irrevocable."

Nyanin observed that although Zambia reached the HIPC decision point in December 2000, it failed to reach the completion point by last December because of government policies. Government's failure to enhance fiscal discipline pushed the country's Poverty Reduction and Growth Facility (PRGF) with the International Monetary Fund (IMF) off track. "The expectation is that a new PRGF will be put in place at the end of the second quarter of 2004," Nyanin stated. "Given that HIPC completion point requires countries to stay on track for at least six months with respect to the PRGF programme, it is expected that Zambia can reach the completion point at the end of the fourth quarter of 2004."

However, he added that the completion point could be reached earlier than projected, depending on the speed with which the government and the IMF agreed on a new PRGF.He explained that while Zambia spent US $1.3 billion on debt servicing before HIPC for the period 2001 to 2003, the figure dropped to US$583 million after HIPC. "Clearly, the recent claim in the press that Zambia will actually pay more in debt service after attaining the Highly Indebted Poor Countries completion point is not true," Nyanin claimed. (The Post, Lusaka)

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