November 13, 2000
Zambia's Finance and Development Minister Katele Kalumba on Monday warned of dire consequences if the country did not qualify for debt relief and said the budget would be totally eroded. As one of the heavily indebted poor countries in sub-Saharan Africa, Zambia has been making desperate appeals to the International Monetary Fund for preferential treatment as it reaches decision point for qualifying for debt relief later this month.
Kalumba, under pressure to present a credible budget next January, said Zambia had met all the benchmarks laid out and did not need any more tests. "We've done what we were required to do and performed on all the key benchmarks. We do not need another crash program," he said. He said the decisive factor should not be how long it took Zambia to put its macro-economic fundamentals in place, but rather what it has achieved so far.
The World Bank and the IMF are slated to meet on November 27 to discuss Zambia's decision point for Highly Indebted Poor Countries Initiative (HIPC). If the country does not qualify for the HIPC decision point, it will have to fork out some 300 million dollars plus interest in debt servicing, a large chunk of it due to the IMF. Zambia would lose out on the few privileges the initiative offers poor countries.
Last year Zambia, with over 75 per cent of its 10 million people living in abject poverty and squalor, had to pay 150 million dollars in debt obligations to donors. "These payments are huge. For the Zambian budget it is a lot of money. We need that door to be opened. This time we're not just playing, but playing to win," Kalumba said. He said Zambia was not only pushing to qualify, but pushing for better terms than the current formula offers.
"What we expect is a creative vision and intelligent resolution of Zambia's case." he said. Zambia would have some 2.5 million dollars written off from its staggering external debt of 6.5 billion dollars if it qualifies for decision point. In Africa, Tanzania, Mozambique and Uganda have qualified for the initiative.
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