Debt relief saves US$180m

This came to light earlier this week when Government unveiled the Fifth National Development Plan (FNDP) and vision 2030.

Finance and National Planning Minister, Ng’andu Magande said the K600 billion was a significant amount of additional resources, which would make a difference in efforts towards achieving the Millennium Development Goals (MDGs).

Mr Magande was speaking when he opened a four-day national stakeholders conference at Mulungushi International Conference Centre in Lusaka.

He said Government was determined to focus its policies and programmes through the FNDP to take opportunity of the generous external debt relief schemes.

He said Zambia had greatly benefited from the debt relief under the Highly Indebted Poor Countries (HIPC) initiative and that due to this initiative and debt service payments, Zambia’s debt stock had reduced significantly from US$7.1 billion at the end of 2004 to $4.5 billion at the end of 2005.

This was after the country attained HIPC completion point in April 2005 and got some debt relief. He said that under the new Multilateral Debt Relief Initiative (MDRI) advocated by the G-8 countries, the African Development Bank (ADB), International Monetary Fund (IMF) and World Bank cancelled 100 per cent of debts owed to them at agreed dates.

The IMF and ADB decided in December 2003 while the World Bank’s cut-off date was December 2004 and at the conclusion of the implementation of the HIPC initiative and MDRI on July 1, this year, reducing Zambia’s external debt to an estimated $502 million.

The minister said the implications of the debt write off for both Government and private sector were tremendous and that the country’s sovereign rating had gone up in global capital markets, opening opportunities for foreign private sector investments.

The successful implementation of the stringent conditions of the HIPC initiatives had generated great confidence and trust in the Zambian Government among the cooperating partners.

In light of this policy stance, Magande said, Government in 2006 continued to channel more resources into economic growth and poverty reduction programmes adding that this would include hiring of 10,000 teachers and 800 core health workers to enhance service delivery in the two sectors.

About 3,074 teachers had already been recruited while about K1.6 trillion had been allocated to the education sector representing 26.6 per cent of the discretionary budget as compared to 24 per cent in 2005.

The health sector was allocated K1.1 trillion representing 18 percent of the discretionary budget as against 12 percent in 2005.

On agriculture, the minister said Government this year continued to enhance food security by implementing programmes that supported small-scale farmers while allocation to the Fertiliser Support Programme (FSP) had been increased from K138 billion to K193 billion to cover more farmers.

Under the agricultural commercialisation programmes, Government continued to support out-grower schemes for the production of most cash crops and in the livestock sub sector, substantial amounts had been allocated for disease control and restocking programmes.

Magande said recognising the key role of infrastructure in enhancing economic development; government scaled up its allocation towards building roads, rehabilitation of culverts and bridges, rehabilitation and expansion of airports.

Livingstone, Lusaka and Ndola International Airports were being attended to and that great efforts had been made to ensure that agreements entered into with cooperating partners for financial assistance targeted infrastructure projects. This was one way of increasing the country’s economic activities and capacity to pay back.

On the national economic performance, Magande said during the few years Zambia had shown considerable improvements, with real growth of Gross Domestic Product (GDP) with an average of 4.7 percent per year in the period 2002 to 2005 as opposed to an average of 2.2 per cent in the corresponding 1998 to 2001 period.

The overall inflation and interest rates during the period 2002 to 2005, also assumed a declining trend, as inflation measured by the Consumer Price Index (CPI) fell from 26.7 percent at end of 2002 to 15.9 percent at end of 2005.

The monthly average inflation rate, for the first half of 2006 had fallen to below 10 per cent with a single digit inflation rate being witnessed for the first time in more than two decades.

Interest rates, have exhibited a downward trend as a result of vigorously pursued policy of reducing government borrowing and credit to the private sector, in real terms, doubled from K50 billion in 2002 to K102 billion in 2004. Preliminary indicators are that this trend would continue this year.

He said the draft of the FNDP follows an extensive consultative process that started at all district levels and in addition of the instrument presented, there were 74 district development plans while some elements of the vision 2030 were extracts from the district plans.

The first three national development plans produced some positive results, notably in the area of social services and infrastructure development but said some plans had some weaknesses, such as the inadequate development of a monitoring and evaluation framework.

Speaking on behalf of cooperating partners, Mr Henry Sprietsma said donors were committed to support the FNDP effective implementation through a Joint Assistance Strategy for Zambia (JASZ).

Sprietsma who is European Union (EU) Head of Delegation, however, said broad-based participation would play a part in fostering deeper national ownership over the development process in Zambia.

He commended Government and other stakeholders for contributing towards the FNDP and that the cooperating partners would look forward towards the sustainable progress towards the MDGs and other national development targets.

“We recognise that now is the time to shift focus from intentions to consequences or, to put it in another way, from planning to implementation and from prioritising to achieving tangible, measurable results,” he said.

Secretary to the Cabinet, Joshua Kanganja said in early 2005, district consultative tours were undertaken in all the 72 districts with major focus on identification of growth areas in the districts as well as obtaining key recommendations that would ensure economic growth and poverty reduction.

Kaganja said some of the consultations included district vision, development programmes and activities in all areas of the economy, ranked in order of priority in the five years of the plan and based on growth areas and comparative advantages.

Others included policy recommendations aimed at successful implementation of the plan and prioritising the programmes and costing them. ‘ Times of Zambia.

July 2006
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