October 20, 2004

IMF: HIPC to be reached only by selling National Commercial Bank

Zambia would only reach the HIPC completion point after it disposes of the Zambia National Commercial Bank, IMF's African Department chief David Andrews has said. During a meeting with the Zambian Trade Unions, Andrews, who with other International Monetary Fund mission team members was reviewing performance of the Poverty Reduction and Growth Facility (PRGF) said the HIPC floating point was also anchored on the sale of ZNCB which the Zambian government had committed itself to. "The floating HIPC completion point was for as long as the privatisation process of Zambia National Commercial Bank (ZNCB) was going to hang in a balance," Andrews said.
In justifying the IMF's condition to have ZNCB sold, Andrews said that the institution was badly handled through government borrowing and that the bank had come to a point of virtual standstill with non-performing loans. According to him, the ZNCB was almost falling apart. This is, however, contrary to the latest results announced by the bank which disclosed that the ZNCB had recorded a profit of K14.3 billion. The latest results indicate an improvement over the K9.5 non-audited profit posted last year.
Andrews also mentioned that HIPC was not the end of the story because even upon reaching the completion point, Zambia would still have problems to encounter particularly over the domestic debt.
As the unionists put it, however, external debt contributed to the skyrocketing domestic debt to which Andrews agreed. They furthermore argued that the answer to Zambia's unsustainable debt was a total debt write off and asked why the IMF did not put money in agriculture where Zambia performed well. According to Andrews, the IMF did not finance specific industries like agriculture although that was where Zambia was performing well because the fund only advised government on macroeconomic policies. (The Post, Lusaka)

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