- Zambia's main creditor countries have agreed to cancel US$ 1.8 billion of the country's debt, leaving Zambia with a debt of only US$ 124 million to these main industrialised countries. The move was announced yesterday, following Zambia's completion of various economic reforms.
The representatives of the so-called "Paris Club" creditor countries met on 11 May in Paris to discuss Zambia's large debt to this informal group of creditor governments from major industrialised countries. They had agreed to recommend to their governments a drastic reduction of Zambia's stock of debt, according to a statement released yesterday.
In order to contribute to restore Zambia's debt sustainability, the Paris Club had decided to "cancel US$ 1.403 billion in nominal terms," which represented these countries' share of a larger debt relief programme. Most creditors had also committed on a bilateral basis to grant additional debt relief to Zambia so that the stock of the debt owed to Paris Club creditors "will be reduced by a further US$ 393 million in nominal terms," the statement said.
Zambia could therefore expect a debt cancelation totalling US$ 1.796 billion, according to the statement. Zambia's debt to Paris Club creditors had thus been reduced from US$ 1.92 billion to US$ 124 million as a result of this agreement and additional bilateral assistance. The creditors had also agreed to reschedule 50 prcent of the payments due in 2005, 2006 and 2007 on the debt remaining due after additional bilateral cancellation.
The debt cancelation by this group forms part of a programme initiated by the International Monetary Fund (IMF), termed the enhanced initiative for the Heavily Indebted Poor Countries (HIPC). The programme ains at dramatically reducing the debt burdon of poor countries that agree to implement a strict anti-poverty and pro-growth economic reform as prescribed by the IMF.
According to the Paris Club, Zambia had now done large efforts to comply with these reform prescriptions. The representatives of the creditor countries said they "welcomed Zambia's determination to implement a comprehensive poverty reduction strategy and an ambitious economic programme providing the basis for sustainable economic growth."
Zambia's Minister of Finance and National Planning, Ng'andu Magande, had headed the Zambian delegation at the Paris meeting. Minister Magande at the meeting had committed to allocate the resources freed by the present treatment of the debt to priority areas identified in the country's poverty reduction strategy and to seek comparable treatment from all its other external creditors.
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