MANOAH ESIPISU AND OWN CORRESPONDENT, Lusaka | Wednesday
ZAMBIAN Finance Minister Katele Kalumba is optimistic that Zambia will win debt relief next month under an initiative spearheaded by the IMF and the World Bank – but if it fails to do so, it faces a potentially crippling $440m debt servicing bill in the next year alone.
Kalumba said if Zambia does not qualify for the Heavily Indebted Poor Countries (HIPC) initiative, it would incur $280m in debt service obligations to the International Monetary Fund alone in 2001, and would have to pay another $160m in interest costs due to other multilateral agencies.
”I am very optimistic we will win debt relief failure would have serious consequences in view of our huge debt service obligation to the IMF next year, which we cannot sustain,” Kalumba said.
The World Bank and the IMF launched HIPC in 1996, promising large-scale debt write-offs for countries that reformed their economies and drew up plans to reduce poverty.
But the initiative has been slow to deliver any meaningful debt cancellation and was overhauled last year with a pledge by the international community to get 20 countries into the scheme by the end of this year.
Kalumba said Zambia was on course to meet its key macroeconomic targets despite strong upward pressure on inflation generated by steep global fuel prices. Inflation would be reduced to 19% in 2000 from 20,6% last year while real gross domestic product would grow by 4% versus two percent in 1999, he said. Inflation has remained stubbornly high, hitting 27% year-on-year in August versus 23% in July and in February.
Zambia had also proved its commitment to economic reform by selling the main assets of former mining giant Zambia Consolidated Copper Mines (ZCCM), which had become a major drain on the Treasury, Kalumba said. – Reuters
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