IMF approves US$330m aid package for Zambia

LUSAKA – The International Monetary Fund has approved a US$330 million three-year aid package for Zambia and the cash will start flowing immediately, IMF resident representative Joseph Kakoza said yesterday.

“The board met in Washington on Monday and approved approximately US$330 million for Zambia over a three-year period,” Kakoza told Reuters in an interview. “This is balance of payments support and the money will begin to flow either today (Tuesday) or tomorrow as Zambia has met the economic conditions.Most of the money will come in the first year,” Kakoza added.The aid will come under the IMF’s Poverty Reduction and Growth Facility (PRGF) and ends a two-year hiatus between the Fund and Zambia over implementation of economic reforms.Kakoza said the fact that Zambia had a new PRGF meant that it was back on track for debt relief under the IMF and World Bank’s Highly Indebted Poor Countries initiative (HIPC).The boards of the Fund and the World Bank would meet in the first quarter of next year to consider Zambia’s record of economic reforms and decide whether to approve a debt write-off of around US$3,8 billion under HIPC, Kakoza said.Zambia had been expected to reach the so-called HIPC completion point, or the date the debt write-off becomes effective, by end-2004 but Kakoza said December economic data would only be ready in the first quarter of 2005 when the IMF and World Bank would then review it.”HIPC completion point needs six months of good performance from the date there is a new PRGF.It is therefore not possible to have HIPC completion point in December because data for December will only be available in the first quarter of next year,” Kakoza said.Foreign donors contribute a large chunk of Zambia’s annual budget and lack of an agreement with the Fund had jeopardised millions of dollars in loans and grants from bilateral lenders.-Nampa-Reuters”This is balance of payments support and the money will begin to flow either today (Tuesday) or tomorrow as Zambia has met the economic conditions.Most of the money will come in the first year,” Kakoza added.The aid will come under the IMF’s Poverty Reduction and Growth Facility (PRGF) and ends a two-year hiatus between the Fund and Zambia over implementation of economic reforms.Kakoza said the fact that Zambia had a new PRGF meant that it was back on track for debt relief under the IMF and World Bank’s Highly Indebted Poor Countries initiative (HIPC).The boards of the Fund and the World Bank would meet in the first quarter of next year to consider Zambia’s record of economic reforms and decide whether to approve a debt write-off of around US$3,8 billion under HIPC, Kakoza said.Zambia had been expected to reach the so-called HIPC completion point, or the date the debt write-off becomes effective, by end-2004 but Kakoza said December economic data would only be ready in the first quarter of 2005 when the IMF and World Bank would then review it.”HIPC completion point needs six months of good performance from the date there is a new PRGF.It is therefore not possible to have HIPC completion point in December because data for December will only be available in the first quarter of next year,” Kakoza said.Foreign donors contribute a large chunk of Zambia’s annual budget and lack of an agreement with the Fund had jeopardised millions of dollars in loans and grants from bilateral lenders.-Nampa-Reuters