[stop-imf] Zambia and debt

[robert weissman]

From: World Bank Press Review <devnews@worldbank.org>
Monday, August 16, 2004


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Total Debt Cancellation Is Not a Sustainable Solution =96 World Bank=92s
Madavo
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World Bank vice president for Africa Callisto Madavo said Thursday that
total debt cancellation was not a sustainable solution to Africa's debt
problem, report The Post (Zambia) and Reuters (08/13).

Arriving in Zambia on Thursday, Madavo said African countries could not
develop while being shut out of the international financial system.
"African countries want to deal with the issue of debt but not while shut
out of the world financial system. We should all ensure that the solution
to today's debt problem does not compromise tomorrow's prospects," he
said. On suggestions that Africa refuses to pay back its foreign debt,
Madavo said such unilateral action would be inappropriate. He noted that
while Africa's debt burden was a hindrance to the continent's development,
there was need for "a negotiated and shared approach to the issue" rather
than unilaterally deciding not to pay. "We all need to ensure that the
debt overhang is removed so that African countries can free enough
resources to invest in growing their economies and thereby reduce
poverty," Madavo said.

He explained this was why the World Bank was calling for reforms in the
global economic system to allow African and other developing countries to
participate fairly in international trade. Madavo said giving African
products guaranteed access to markets in developed countries would enhance
the continent's drive for sustainable development and reduce its
dependency on borrowing. "We strongly believe that Africa should have
unrestricted access to international markets for all products from
agricultural produce to manufactured goods," Madavo said. "This will help
reduce the continent's dependency on borrowing because it will be able to
earn the resources needed for investment."

Meanwhile, discussing Zambia=92s economic situation, The Times of Zambia
(08/13) reports Madavo said the country=92s poverty levels had risen over
the past decade. The vice president said 70 percent of Zambians now lived
below the poverty line, with the majority living on $1 per day. He,
however, noted the country had taken strong strides in the past three
years to get out of poverty and see meaningful development. He said Zambia
had also embraced the diversification program with zeal, and it was
important that the country moved away from depending on its traditional
copper exports. He said he was also impressed with the position Government
had taken to institute macro-economic stability and fiscal discipline and
was optimistic Zambia would reach the HIPC completion point by the close
of the calendar year 2004. He maintained that though Zambia had managed to
maintain macro-economic discipline, it had to continue with its economic
reform process with or without the HIPC initiative. "As the World Bank, we
will stay the course and continue to support Zambia," Madavo said.

Reuters (08/13) explains that at HIPC completion point, the International
Monetary Fund, World Bank and other multilateral and bilateral donors will
write-off $3.8 billion of Zambia's estimated 6.8 billion external debt
stock. As part of the HIPC deal, Zambia is expected to maintain sustained
macroeconomic stability, keep the civil service wage bill within 8.0
percent of GDP and also reduce domestic borrowing to December this year,
the Treasury says. The government is expected by December to settle
arrears owed to power utility Zesco before its commercialization and
liberalize the energy sector to enable oil marketing companies to import
fuel if they want, the Treasury says.

Xinhua (08/14) finally adds local newspaper the Times of Zambia reported
Saturday that Zambian President Levy Mwanawasa said his government will
sign a 28 million loan with the World Bank on Monday. The president was
quoted as saying the loan is meant for the Support for Economic Expansion
and Diversification program. Mwanawasa also noted tourism was one of the
sectors that would benefit from the loan because government considered it
key to economic recovery. He said Zambia had benefited from the World Bank
and would continue to partner with it since it was an important
institution in the country's economic development.