From Africa Recovery, Vol.13#2-3 (September 1999), page 32 (part of special feature on ECA conference "Financing for Development")

Zambia calls for total debt cancellation

In the long queue for consideration as a heavily indebted poor country, Zambia wants immediate help.

"Zambia is calling for outright debt cancellation and immediate debt relief," declares Mr.Godfrey Simasiku, Deputy Minister of Finance and Economic Development. Obvious reasons include Zambia's high infant and child mortality rates, its imbalance of payments and low foreign reserves. World demand for copper, the economy's mainstay, has been falling since the South-East Asia crisis. Asian countries "are major customers of copper, so if their economies collapse, there's no way that Zambia and others dependent on that market can survive that serious shock." Official development assistance (ODA) debt should be cancelled and aid given only as grants, Mr. Simasiku adds.

With foreign debt of some $7 bn, "we are really affected by the debt overhang," he says, pointing to continuing problems with public finance. For example, public sector reform is a "central part" of the current adjustment programme with the IMF and involves "trimming" over 15,000 people from the payroll. Donor promises of supporting financing have not materialized, "and there's nothing more painful than somebody laid off and not being given the package."

Facing an array of problems, including an "unacceptable" 80 per cent of its people in poverty, Zambia finds the HIPC initiative "rather too long." In 1998, education and health combined got "only 67 per cent of what was allocated to debt service." Indeed, "we can only reverse" the economic and social decline "by suspending debt payments altogether."

On moral hazard -- when debt cancellation supposedly "rewards" economic mismanagement -- Mr. Simasiku affirms that "any funds spared due to debt cancellation or relief will definitely go into the grossly underfunded social services." Zambians would benefit if the government and local communities had "more money to build more clinics and more district hospitals, to put medicines in those hospitals, to build and refurbish schools."

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