June 18, 2004

IMF approves US $320 million loan

The International Monetary Fund (IMF) has provided US $320 million as balance of payments (BoP) support to Zambia following the country's accession of the Poverty Reduction Growth Facility (PRGF). As finance minister Ng'andu Magande said, the money had already been front-loaded by the IMF and would be available up to 2007. "We can draw out that money to support imports or if the Bank of Zambia needs to undertake any financial obligations". Maganda said that some of the allocated US $320 million would be used to stabilise the exchange rates if need arises. Magande added that the World Bank had also indicated that Zambia would be given another US $250 million as project assistance over the next three years."According to the World Bank criteria for qualifying for assistance which determines how much money goes to a given country, we are now in the middle case," he said. "A few weeks ago we were on the lower case, meaning we could only get up to US $160 million. If we qualify for the completion point, we could be in a position to get up between US $300 to US $400 million over a three-year period." Magande said Zambia also stood to benefit from loans from the African Development Bank for support in agriculture. He added that as a consequence of the accession to the PRGF, Zambia would be getting a grant of US $125 million from the European Union for development projects. "The rest of the donors are waiting to see how we will have used these funds before more can be pledged," he said. "That is why we say we need them (IMF). They know how to make a country survive." Magande said that the government would maintain its fiscal discipline, through minimal borrowing from commercial banks, so that the Highly Indebted Poor Countries (HIPC) completion point could eventually be attained.

In the meantime, Jubilee Zambia has stated that the Highly Indebted Poor Countries (HIPC) initiative has failed to deliver solutions to Zambia's debt crisis and that there is need for Zambians to unite to influence the international community for total debt cancellation. According to Jubilee Zambia coordinator Charity Musamba, the International Monetary Fund and the World Bank engineered debt relief facility was just burdening Zambians even more and depriving them of hope for human development. "We call upon Government, international supporters and Zambian people to demand that the calculation of debt sustainability be broadened and be based on our specific needs, especially aimed at addressing the current poverty crisis in a sustainable manner," she affirmed. Furthermore she said that Government had to learn from the experience with the HIPC's failure to deliver the nation from poverty, and come up with a realistic mechanism of resolving the debt burden. According to her, Government should re-institute the Independent HIPC Monitoring Team, which was disbanded without indicating when an alternative monitoring mechanism would be put in place. (The Post, Lusaka)


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