ZAMBIA: HIPC targets have been met, IMF team

[ This report does not necessarily reflect the views of the United Nations]

JOHANNESBURG, 11 Feb 2005 (IRIN) - Zambia is set to reach the Highly Indebted Poor Countries (HIPC) debt-relief completion point, according to an International Monetary Fund (IMF) statement.

The country has an external debt of US $6.5 billion, of which $3.8 billion will be written off once the HIPC completion point is achieved.

An IMF staff mission to Zambia commented that "IMF and World Bank staff have reviewed progress made in meeting the steps required for reaching the completion point under the HIPC initiative. Information received indicates that all triggers relating to poverty reduction and social sectors have been met".

World Bank and IMF staff will finalise the overall evaluation of Zambia's performance and progress towards the HIPC completion point in Washington. The executive boards of the IMF and World Bank are expected to consider the evaluation document in the next few months.

The IMF staff mission was in Zambia from 30 January to 9 February to review the country's performance in achieving the targets set for the end of 2004.

"Zambia's economic performance continued to improve during 2004. Boosted by increased production in the mining, agriculture, construction and service sectors, real GDP is estimated to have increased by 5 percent in 2004, significantly above the budget target of 3.5 percent. This was the fifth year in a row of real GDP growth averaging over 4 percent, following nearly two decades of generally declining output," the IMF mission noted.

Although fuel prices increased sharply, the rate of inflation was held to 17.5 percent, "well below the original target of 20 percent".

"The government sharply reduced its domestic borrowing in 2004, helping to ease pressure on interest rates and prices. At the same time, releases for expenditures on priority poverty reduction programmes were in line with the budget. All quantitative performance criteria and benchmarks for end-December were attained," they said.

However, despite the creditable improvement in economic performance, the mission noted that Zambia's social conditions were still difficult.

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