By BUUMBA CHIMBULU
ZAMBIA is in debt distress and urgently needs deep and comprehensive debt treatment and as a result, the World Bank has released US$100 million concessional credit its support for Macroeconomic Stability, Growth and Competitiveness Programme of the country.
The World Bank’s release of the US$100 million concessional credit to Zambia in the second tranche is in response to country’s urgent need of debt relief to restore its medium-term debt sustainability and attract the new investment needed for growth and jobs.
World Bank Group President David Malpas has said as Zambia was entering its third year working toward a debt restructuring under the G20’s common framework, the country’s debt burden had continued to rise, with interest arrears, late interest charges and penalty charges accumulating as a result of the prolonged delays.
The World Bank has of yesterday released US$100 million concessional credit to Zambia in the second tranche of its support for Macroeconomic Stability, Growth and Competitiveness Programme.
Mr Malpas said the World Bank’s $740 million of concessional disbursements to Zambia in 2022 was providing strong support while recognizing the remarkable leadership for government to reduce the fiscal deficit and implement difficult reforms.
Mr Malpas is however concerned by the slow pace of the creditors’ committee and the impact of the delays on growth and poverty as a consequence.
He said the Zambia Macroeconomic Stability, Growth and Competitiveness Program was supporting the government’s policy and institutional reforms aimed at restoring fiscal and long-term debt sustainability.
He stated that it was critical that government should increase farmer productivity and access to agricultural markets and ensuring sustainable access to energy as well as enhancing access to finance and private sector development.
“Zambia has continued to implement agreed structural policies toward macroeconomic stability even as there are protracted delays from official bilateral creditors to discuss and finalize debt treatment under the G20’s Common Framework,” Mr Malpas said.
The US$100 million credit released yesterday is part of the World Bank’s US$275 million Concessional Development Policy Financing (DPF) for Zambia approved by the Board of Executive Directors in October to support of Zambia’s reforms to restore fiscal and debt sustainability and promote private sector-led growth.
The latest support would bring total disbursements on concessional terms from the World Bank’s International Development Association (IDA) to Zambia to US$740 million during 2022.
In February 2021, Government requested a debt treatment under the G20’s Common Framework and launched fiscal and structural reforms to restore macroeconomic stability and reinvigorate growth.
The government had improved fiscal discipline, public financial management, and transparency, including in debt management and reporting. It has also implemented structural reforms focused on removing market distortions and fighting corruption.