Zambia Reports

Anti-IMF protests in Zambia

IMF faces new round of protests in Lusaka

27 April 2000 By Dickson Jere

LUSAKA, April 26 (Oneworld.Net) - Scores of anti-International Monetary Fund (IMF) protestors were dispersed by armed riot police in Zambia's capital Lusaka yesterday after they attempted to picket outside a hotel where IMF and Zambian officials were meeting.

Protestors - brought together by leading women's rights groups opposed to IMF and World Bank policies which attempt to prise open markets - accused the Fund of bringing misery to poor countries by imposing strict conditions on their economies, which benefit only the rich.

"IMF policies are killing us, especially women and children," said Emily Sikazwe of Women for Change shortly after the aborted demonstration.

Officials from the IMF and the Zambian parliament were meeting to discuss their partnership for growth and poverty reduction. Speaker of the National Assembly, Amussa Mwanamwambwa, told IMF representatives that Zambia's continued indebtedness to the IMF had resulted in a perception that multilateral creditors were obstacles to the attainment of domestic socio-economic needs.

"It is important for the IMF to use this [visit as an] opportunity to explain before the people's elected representatives the IMF s difficulties and objections to the worldwide call for total debt cancellation," Mwamamwambwa said.

The IMF says its lending schemes were broadened recently through the establishment of the Poverty Reduction and Growth Facility. The scheme to cut poverty would be planned by government with input from civil society, said IMF Assistant Director for Africa Reinold Van Til.

Oil prices, Zambia and the IMF/ World Bank

Thursday, October 19, 2000

Times Of Zambia, Lusaka.

ZAMBIA may receive assistance from the World Bank to cushion the negative effects of increases in fuel prices on the international market.

Zambia's fuel importation costs were likely to increase by $60 million this year.

Mr Hinh Dinh, the World Bank lead economist for macro-economics (Southern Africa) said this in Lusaka yesterday.

He said Zambia and many Third World countries were suffering shocks of the escalating prices for petroleum products.

'The World Bank may come up with a scheme to assist Zambia and other developing countries to deal with these temporary shocks. There is a severe impact caused by this problem which may prove difficult to reach the inflation (reduction) target for this year', he said.

The bank will soon meet to review the situation and decide on whether to release any additional assistance.

Mr Dinh was speaking at a World Bank non Consultative Group (CG) donors briefing at the Canadian embassy in Lusaka.

World Bank economist for the country office, Mushiba Nyamazana, speaking on the same topic said the inflation target of 15 per cent by the end of the year would be difficult to achieve because of the fuel price increases.

Finance Minister Katele Kalumba recently adjusted his target to 19 per cent.

'High oil prices translate into serious problems regarding inflation. You can imagine that this is October and inflation is at 25 per cent', he said.

Mr Nyamazana said proper handling of public expenditure was key to ensuring there was enough money for education, health and other public sectors.

The meeting learnt that Zambia was one of the 20 countries in the world that would be considered for HIPC. The multilateral donors were due to meet at the end of the year for a decision point on HIPC.

World Bank resident representative to Zambia Laurence Clarke said problems affecting poor countries would not end over-night even if their debts were cancelled.

'What is required is to give some soft terms for loans and this will be happening under HIPC. Assuming all the loans were cancelled today, tomorrow many countries would still need external financing.

'The best way is to meet each other half way', Dr Clarke said when responding to South African high commissioner Walter Thabete who wondered why the international community could not just cancel the debts owed by poor countries.

He said the moral concept of cancelling the debt would mean looking at cases of China and India, including other countries whose citizens live below $1 each day.

It would also discourage foreign investments as there is no guarantee that mistakes made in economic management, or the lack of experience would be eradicated.

The World Bank officials also said economic growth of between 3.5 per cent and four per cent was anticipated this year, although for a country like Zambia a percentage of between seven and eight would be most ideal for poverty reduction.

The mid-term review at the end of June showed that the economy had grown by 2.2 per cent.

Dr Clarke said the World Bank was now sending country representatives to the respective countries to have better understanding of clients' needs.

The bank has so far given Zambia at least $100 million for various projects this year.

Indications are that the privatisation of the ZCCM has increased profitability for commercial banks on the Copperbelt that now handle a big volume of business.

With the anticipated increase in copper production, the economy was expected to grow.

ALERT: Zambia debt fiasco
- letters needed by Dec.7 - December 01, 2000


We have just learned that the IMF and World Bank boards will be considering the HIPC (Heavily Indebted Poor Countries) debt relief package for Zambia on Tuesday, December 7. Outrageously enough, this package would actually have Zambia pay MORE debt servicing for the next several years than they have been paying.

For people in the U.S., please send the following letter or one like it to the following people (in other countries, please contact your Finance Ministry). We are providing fax numbers and/or email addresses (faxes are preferable). Following the letter are some facts on Zambia provided by Jubilee 2000/USA, and a statement on the Zambian case issued by a debt activists' conference in Helsinki.

  • Mr. Larry Summers - Secretary of the Treasury - 202/622-0073
  • Mr. Timothy Geithner - Treasury Undersecretary for International Affairs - 202/622-0417
  • Ms. Karin Lissakers - U.S. Executive Director to the IMF - - 202/623-4661
  • Ms. Jan Piercy - U.S. Executive Director to the World Bank - 202/477-2967

Dear ------------,

I have learned that the International Monetary Fund and World Bank will be deciding on Zambia's eligibility for their debt relief program ("HIPC") on December 7. I understand that it appears that Zambia will actually have to pay more in debt servicing once it is approved to receive debt relief.

Can there be any more pointed example of the bankruptcy of the IMF/World Bank debt program than this? What sort of cruel accounting joke would subject the people of a country to a debt relief scheme that increases annual debt servicing from $150 million to $235 million by 2002?

I understand that the IMF has suggested that its "relief" could be "frontloaded," meaning that reductions which would normally be scheduled for five years from now could be moved up. Even under this arrangement there would still be no reduction in Zambia's debt payments. The IMF's suggestion — which may not be taken up by its Board at any rate — would still deprive Zambia of any new funds for poverty-targeted programs.

This situation would be outrageous in any country where the IMF operates. But with 80% of Zambia's population living on less than one dollar a day, and almost 10% of the people known to be HIV positive, this parody of "debt relief" is particularly cruel. Zambia cannot sustain more loans to spread out the scheduled spike in debt payments. The only logical or just solution is comprehensive cancellation of Zambia's debt.

Given that the major source of Zambia's debt crisis is loans made by the IMF itself in 1995 (which were intended to pay off previous loans), and given the absurd penalties involved in getting "debt relief" under the HIPC program, how can the supporters of HIPC argue with the position of some in the U.S. Congress that HIPC is nothing more than a way for the institutions to bail themselves out with money contributed by taxpayers in countries like the U.S.? Why should citizens of the U.S. and other wealthy countries continue to support a program that does no good for people in Southern countries and just contributes money to keep the institution that makes these absurd debt arrangements afloat?

I urge you to use your influence at the IMF and World Bank to advocate for 100% cancellation of Zambia debts.


From Jubilee 2000/USA Additional Facts on Zambia
(figures derived from the IPRSP document on IMF website):

-- More than 70% of population is poor, living on less than $1 a day — Life expectancy = 44 years — All development indicators are below the average for Sub Saharan Africa and have worsened over the last 10 years - Only 1/2 of the population has access to safe water — 53% of children under 5 are chronically undernourished. — School enrolment rate (primary school): Has declined substantially since early 80s. Now at 68%. One explanation: children staying home to care for sick relatives — Problems Zambia has faced: several droughts; drop in price of copper (since 1995); drop in copper production; recent oil price increase; ripple effect of Asian currency crisis; debt burden

Zambia's debt:

-- At end of 1999 the debt was $6.3 billion in nominal terms 43% of the debt is multilateral: 19% of the debt is owed to the IMF 58% of the debt is bilateral, owed to Japan and other countries

Since 1990 Zambia has paid $4.437 billion in debt payments (interest and principle), an average of $443.7 million per year. For the past three years the payments have taken about 1/4 of the government's revenue (national budget). During the years 1990-1996 the average payment was equal to 85.9 % of the country's revenue. The increase of Zambia's payment obligations, despite HIPC debt relief, is due to IMF loans coming due starting in 2001. These loans were taken on in a massive effort to clear out "arrears", or overdue payments, on other loans.

(note that the date of the meeting on Zambia's HIPC plan changedshortly after the issuance of this declaration)


A Declaration from the Eurodad Tenth Anniversary Conference, Helsinki, Finland

November 15-17, 2000

This Conference notes that:

  • Zambia, one of the poorest countries in the world, with an average life expectancy of 44 years and falling because of the impact of HIV/AIDS, has been presented with an agreement under the Heavily Indebted Poor Countries (HIPC) initiative whereby actual debt payments will increase, not decrease, after the agreement is implemented. Under this agreement, annual debt payments will increase from $150 million to $235 million by 2002.
  • The IMF's proposed 'solution' to this problem is to change the timing of its relief, taking assistance from later years in order to reduce payments in the first few years. This does not provide any net benefit to Zambia and means that payments will still not fall after the HIPC initiative, allowing no extra funds for poverty reduction - one of the stated aims of the HIPC initiative.
  • Even with the IMF's solution, Zambia is likely to pay around $150 million on debt service in 2001, almost one-third of its entire budget. This is more than the entire $123 million health budget in a country where HIV/AIDS has left nearly 13 per cent of children orphaned - the highest rate in the world.
  • The problem at the root of this issue was caused by lending by the IMF in 1995 which was intended in large part merely to provide the funds to pay off earlier debts, and the solution proposed merely repeats that same bad practice of the IMF in its failure to recognise debts that are unpayable.
  • The case of Zambia highlights the inadequacy and inflexibility of the HIPC initiative to meet its own stated goals of providing a sustainable exit from the debt crisis and releasing new funds for poverty reduction.
  • The Board of the IMF will be discussing Zambia's case on November 27th, when it is expected that Zambia will reach the 'Decision Point' of the HIPC Initiative (the point at which the amount of debt to be cancelled is determined, and where 'interim debt relief' begins).

This Conference therefore:

  • Welcomes the call by the Zambian government and civil society for the complete cancellation of its debts, so that these resources can be used in the fight against poverty.
  • Rejects the HIPC agreement offered to Zambia and the inadequate solution proposed by the IMF.
  • Calls on the Managing Director, Governors and Executive Directors of the IMF to go beyond the terms of the HIPC initiative and agree the immediate cancellation of 100 per cent of the debts owed by Zambia to the IMF, as the only genuine and sustainable way to solve Zambia's IMF debt problem - a problem largely of the IMF's own making.

The above Declaration was agreed by a range of representatives from civil society organisations from around the world, including the following:

  • 50 years is Enough Network - USA Broederlijk Delen - Belgium
  • Christian Aid - UK
  • Debt and Development Coalition/Jubilee Ireland
  • Erlassjahr 2000 - Austria
  • Eurodad Secretariat - Belgium
  • Friends of the Earth (FOE) - USA
  • Ibis - North/South Coalition - Denmark
  • Jesuits for Debt Relief and Development (JCTR) - Ireland
  • Jesuits for Debt Relief and Development (JCTR) - Zambia
  • KEPA (Service Centre for Development Co-operation - Finland
  • KOO - Austria
  • Norwegian Campaign for Cancellation of Third World Debt/Jubilee 2000(SLUG) - Norway
  • Oxfam International Swiss Coalition of Development Organizations - Berne
  • WEED - Germany
  • WEMOS - Netherlands

50 Years Is Enough Network
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"States of Unrest" | IMF/ WB Struggles | PGA