Sunday, June 23, 2024

World Bank Approves $275 million Development Policy Operation for Zambia

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The World Bank has approved a 275 million United States Dollars development policy operation for Zambia to support the country’s reforms to restore fiscal and debt sustainability and promote private sector-led growth.

The operation is an integral part of the International Development Association’s (IDA) substantial contribution to help Zambia recover from the COVID-19 pandemic and spillovers from the war in Ukraine, emerge from its debt crisis, and shift to more sustainable and inclusive growth.

In a press statement issued by the World Bank on behalf of the Group President David Malpass, it was noted that Zambia is in debt distress and needs a deep and comprehensive debt treatment to place public debt on a sustainable path.

Mr Malpass cited that in January 2021, the government requested support under the G20 Common Framework for Debt Treatments and launched fiscal and structural reforms to restore macroeconomic stability and reinvigorate growth.

He added that the government has prioritized commitment to fiscal discipline, improved public financial management, and greater transparency, including in debt management and reporting, other structural reforms have focused on removing market distortions, improving transparency, and fighting corruption.

“Restoring macroeconomic stability and debt sustainability is necessary for attracting private sector capital inflows, investment, and growth,” Malpass said

“As Zambia seeks debt relief under the G20 Common Framework, I urge official bilateral and private sector creditors to agree promptly on a deep debt reduction that is consistent with the joint WBG-IMF debt sustainability analysis and brings public debt to sustainable levels, foster growth and private sector investment depend on prompt completion of the debt reduction,” Malpass added

Mr Malpass explained that the operation supports the government’s policy and institutional reforms aimed at: 1) restoring fiscal and long-term debt sustainability, 2) increasing farmer productivity and access to agriculture markets, 3) ensuring sustainable access to energy, and 4) enhancing access to finance and private sector development. Financing for this operation is provided by the World Bank’s International Development Association (IDA).

Mr Malpass further explained that the operation is part of the coordinated support with Zambia’s development partners to promote critical structural reforms. Continued support by the development partners is needed as Zambia is pursuing appropriate economic policies and making good faith efforts to reach a collaborative agreement on debt treatment with its official bilateral and private sector creditors.

The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 74 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.3 billion people who live in IDA countries. Since 1960, IDA has provided 458 billion United States Dollars to 114 countries. Annual commitments have averaged about 29 billion United States Dollars over the last three years (FY19-FY21), with about 70 percent going to Africa.

5 COMMENTS

  1. We thank ba PF for making sure we are in debt distress again. Back to the late 90’s and early 2000’s highly indebted country scenario

  2. I am still struggling to understand the role of these institutions. Is this amount something Zambia can actually fail to raise by itself? Now I understand how Magufuli rapidly transformed Tanzania. There is nothing that we benefit from these institutions. Let’s change mindset.

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