The interest-free loan had a grace period of 10 years, implying that the country was due to start paying back the principal amount in instalments beginning next year over a period of 20 years.
Acting Minister of Finance and National Planning Peter Daka and Belgium ambassador to Zambia Paul Jansen made the announcement after signing the debt cancellation protocol in Lusaka yesterday.
Mr Daka said at the ceremony that the cancellation of the debt is evidence of Belgium’s commitment to foster economic development in developing countries like Zambia.
“This occasion no doubt brings back to our minds memories of how efforts by the international community drastically reduced Zambia’s sovereign external debt to manageable levels upon reaching the completion point in 2005.
“ The gesture shown today by your Government to cancel all outstanding amounts due on the loan provided to Government in 2000 amounting to K34 billion is evidence of Belgium’s commitment to foster economic development in countries like Zambia,” Mr Daka said.
He said the cancellation of the debt means Government will not have to allocate resources in the budget for the repayment of the loan.
Mr Daka said the present stock of debt, which stands at over US$1 billion, will automatically be reduced by the amount cancelled.
He said the debt relief will allow the country to channel resources to other areas of development such as the achievement of the Millennium Development Goals (MDGs).
“What Belgium has done today is a clear testimony of confidence and trust that you have in our economy .This ceremony signifies that you have given credit to economic management of the country,” Mr Daka said.
He said Government has put emphasis on effective public resource management to ensure that the desired benefits of economic development are realised.
Mr Daka said Government believes that as long as there is no commitment to prudent use of public resources, the benefits of debt relief will not be realised by the masses.
“Government has thus been embarking on the implementation of the public debt reform programme, which among others, includes the implementation of a debt strategy which will ensure that debt is contracted at low cost and minimum risk to maintain sustainable levels of sovereign debt which will prevent the country from falling back into the debt trap,” he said.
Mr Daka appealed to other countries which have pledged to provide debt relief to Zambia under the Heavily Indebted Poor Countries (HIPC) framework to emulate Belgium and follow through with their commitments.
And Mr Jansen said the written-off debt is under the agreement of the HIPC initiative.
Mr Jansen said the Belgian Government had made a commitment to cancel debt of countries which have reached the HIPC completion point.
He said his Government believes Zambia is on the right path of economic recovery hence the cancellation of the debt.
Mr Jansen said his country is pleased to cancel the debt as the country has shown positive signs of economic recovery.
He said Belgium will keep its commitment of writing off debt despite Europe having not been spared by the global economic crisis.
“Despite the challenges that we are facing as Belgium, we will stand by our commitments of writing off debt of countries that have reached HIPC completion point,” he said.
[Zambia Daily Mail]
Thank you Belgium.
This gesture is a challenge to the govt of Zambeziland to channel the saved funds to improve basic needs of our people.
I pray that Agriculture may be given first priority, followed by education and health.
This is good news! Zambia’s external debt stock stands at 1.2 billion. The cancellation means that the debt stock now stands at 500 million dollars!
This is good news but our leaders don’t have the sense to use this to the advantage of the people.
🙂 Pondani no # 2 where ever did you get that number?
🙂 here is my take on this, the two people who we know got us the first seven billion debt should not speak or show their faces in the media.
🙂 Lt one Saturday or any day could you only show articles of only Zambian entreprenuers and the goings on of maybe a local progressive family.