December 1, 2000
In commenting on today's Executive Board discussion on Zambia, Shigemitsu Sugisaki, IMF Deputy Managing Director, said: "The International Monetary Fund's (IMF) Executive Board agreed today to change the rules governing the delivery of the Fund's interim HIPC 1 assistance. The new rules permit, under exceptional circumstances such as Zambia's, for the Fund to accelerate delivery of debt relief. This action was taken to address a hump in Zambia's total debt service payments originating from Zambia's arrears clearance operation to the Fund in 1995.
"In the absence of HIPC assistance, Zambia's debt service would have more than doubled next year to over US$420 million. However, as a result of the IMF Board's decision today, and coupled with decisions by other creditors under the HIPC framework, it is clear that Zambia's debt service payments in each of the next three years will be lower than this year. The IMF will effectively reduce by about two-thirds Zambia's debt to the IMF. "The decision by the IMF Executive Board, combined with a substantial increase in net resource transfer to Zambia, will help give the country the resources that will permit a significant increase in social expenditures in real terms, especially to fight AIDS and poverty," Sugisaki said.
A final decision on Zambia's debt relief under the enhanced HIPC Initiative is still pending action next week by the World Bank's Executive Board. A press release will be issued jointly with the World Bank following those deliberations.
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