February 10, 2005

HIPC benchmarks met

Zambia has met all benchmarks required to reach the completion point under the Highly Indebted Poor Countries (HIPC) initiative, the visiting team from the International Monetary Fund (IMF) and World Bank has said. IMF resident representative, Joseph Kakoza, announced in a statement that the IMF and World Bank staff would prepare a HIPC completion point document for consideration by the executive boards of the two institutions. Mr Kakoza said the IMF's executive board would consider the second review under the Poverty Reduction and Growth Facility (PRGF) arrangement at the same time.

IMF and World Bank staff have reviewed progress made in meeting the steps required for reaching the completion point under the HIPC initiative and "information received indicates that all triggers relating to poverty reduction and social sectors have been met," Kakoza remarked. According to him, substantial progress had also been made in meeting conditions in other areas, including in the implementation of the Poverty Reduction Strategy Paper (PRSP) and Transitional National Development Plan (TNDP). The IMF and World Bank staff would finalise the overall evaluation of Zambia's performance and progress towards the HIPC completion point in Washington. "It is envisaged that subject to IMF and World Bank management approval, the staff would prepare a HIPC completion point document for consideration by the executive boards of the IMF and World Bank," he said. Moreover, Kakoza let know that Zambia's economic performance continued to improve during 2004 and that it was boosted by increased production in the mining, agriculture, construction and service sectors. He said real Growth Domestic Product (GDP) increased by five per cent in 2004, significantly above the budget target of 3.5 per cent.

This was the fifth year in a row of real GDP growth averaging over four per cent, following nearly two decades of generally declining output. Fuel prices increased sharply, but the rate of inflation was held to 17.5 per cent, well bellow the original target of 20 per cent. Despite the creditable improvement in economic performance, Zambia's social conditions remain difficult, he noted. Available data indicated that strong performance under the PRGF-supported programme had continued through December last year while Government sharply reduced its domestic borrowing in 2004, helping to ease pressure on interest rates and prices. An IMF mission visited Zambia from January 30 to February 2005 to conduct discussions with the government of Zambia on the second review under the PRGFP. (The Times of Zambia, Ndola)

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