“On March 26, the Japanese government offered the Zambian government a loan worth US $274 million for the implementation of the Increased Access to Electricity Services Project to cover five areas in the country”, observes Tina Nanyangwe-Moyo, Coordinator of the JCTR’s Debt, Aid and Trade Programme. “According to the Japanese official, at the signing ceremony” Moyo continues, “Japan had resumed her Official Development Assistance (ODA) loans to Zambia which she relinquished in 1992 due to Zambia’s heavy external debt burden before the attainment of 2005 Highly Indebted Poor Country Initiative (HIPC) Completion Point”.
“As an institution that played a key role in the success of the HIPC Completion Point through the Jubilee-Zambia debt cancellation campaign”, Moyo continues, “we urge creditor countries not to take advantage of Zambia’s favourable fiscal space to lend irresponsibly. Just a few weeks ago, the International Monetary Fund (IMF) offered the Government a loan worth US $200 million to boost national reserves. The Japan and IMF loans are just two loans among several loans that the government has signed since the beginning of this year”. Moyo observes that Japan as a member of the Paris Club should show great commitment to the five good practise principles of the Paris Declaration if their ODA flows to Zambia are to yield positive results.
Commenting on the same matter, Privilege Haang’andu, JCTR’s Programme Officer for Debt and Public Resource Monitoring warns that unless Zambia works on a more transparent debt management strategy, it shall perpetually be prey to floating loans from developed countries and the International Financial Institutions (IFIs). “It is crucial”, Haang’andu cautions, “that Government realises that every single loan contraction commits the country’s future taxes to debt servicing at the expense of national development. It is for this reason we have tirelessly implored Government to urgently work on a loan contraction framework that involves parliament in setting annual ceilings of what can be borrowed in a given financial year”.
“Although HIPC is often used as a basis for providing external financial support,” observes Haang’andu, “Zambians have not yet experienced the benefits of HIPC and the Multilateral Debt Relief Initiative (MDRI) even after bearing the austere conditions of processes. The majority of Zambians still live in poverty despite the gains from the debt write-off”. “Therefore”, concludes Haang’andu, “much as we support external borrowing, responsible financing and borrowing should be at the core of such financial support”.
[Press statement by JCTR]