World Bank Group President David Malpass has however urged the Creditor Committee to reach a quick agreement on the specifics of deep debt relief for Zambia.
According to a statement released to the media last , the move is in line with the upper-credit-tranche program of the International Monetary Fund (IMF) and the joint World Bank-IMF Debt Sustainability Assessment.
“I very much welcome today’s announcement as an important step toward reducing Zambia’s debt, significant debt relief is needed to secure long-term debt sustainability and attract the investment necessary for growth and poverty reduction.
“ I urge official bilateral and private sector creditors to participate on comparable terms, granting Zambia a substantial net-present-value reduction in debt, ” he said
The W.B expects commercial creditors to promptly agree on a comparable debt treatment for Zambia that would achieve debt sustainability over the medium term as well as a common discount rate be utilized in measuring the debt relief provided by bilateral and commercial creditors to ensure comparability of treatment.
Zambia needs a timely debt resolution, without which all the developmental gains achieved in the last two decades may continue to be wiped out and that the country may continue experiencing a decline in its per capita Income, which led to its recent re-classification as a low income country for the first time since 2012.
“In 2021, Zambia’s per capita income declined to $1,040 and the country was re-classified as low-income for the first time since 2011. This follows several years of decline in Zambia’s GNI per capita, starting with $1,440 in 2018.
“ With the economy further weakened by the COVID-19 pandemic, 60 percent of the Zambian population lived on less than $1.90 a day in 2021. Without a timely debt resolution, this trend will continue to wipe out the development gains that Zambia achieved in the past two decades, ” World Bank Group President.
Reveling that his global Bank provides large net positive flows to Zambia to boost sustainable growth and poverty reduction , Mr Malpass disclosed plans to support Zambia with new financing of over US$2 billion in the form of concessional loans through to 2032.
This includes financing for investment projects in agriculture, education, energy, health, and social safety nets as well as policy-based lending in support of the structural reforms that the Zambian government is implementing.
The said programs would add to the over US$520 million in fresh financing committed by the World Bank to Zambia in the last fiscal year.
“ The World Bank is working closely with the IMF, the G20, and the Creditor Committee to support the Common Framework process as a path to long-term debt sustainability, restoring macroeconomic and debt sustainability, strengthening governance, and promoting private-sector-led inclusive growth are critical areas of our work with the Zambian government and that The World Bank is determined to support the Common Framework and the Zambian authorities in these endeavors, “ concludes Mr Malpass.