Zambia and the IMF
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Mr. Takatoshi Kato, Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today in Lusaka:
"I am delighted to have had the chance to visit Zambia. I want to thank the authorities for their very gracious hospitality.
"During my stay here, I had the opportunity to meet with President Levy Mwanawasa, as well as Finance Minister Ng'andu Magande and other senior officials. Our talks were open and productive. I also met with members of the donor and business community, the chairs of parliamentary committees, as well as with representatives of civil society. And I was fortunate to be able to see the fine work being done to assist orphans and vulnerable children by the KwashaMukwenu Women's Group.
"There is little doubt that Zambia has made remarkable progress in recent years, achieving real GDP growth of over 5 percent in 2004, making the past five years the strongest and longest period of growth in more than two decades; we expect growth in 2005 to be maintained at about this level. Improved macroeconomic management have underpinned this strong performance. Although inflation has remained too high, important progress has been made in setting the stage for further declines in inflation over the next two years. The government's program—supported by the IMF's Poverty Reduction and Growth Facility (PRGF)—also enabled Zambia to reach completion point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative in April of this year. This is an important achievement resulting in sizeable debt reduction for the country. The challenge now is to make this a true watershed in Zambia's development, building upon the recent improvement in economic activity.
"In my meetings with the authorities, I expressed the Fund's strong support for the overall thrust and direction of the policies being pursued, with its emphasis on addressing social needs—especially health and education—and improving the conditions for investment and growth, while maintaining fiscal discipline and a sustainable debt position.
"But it was clear from the discussions that there are important challenges ahead if Zambia is to achieve faster growth, strengthen resilience to economic and other shocks, significantly reduce poverty, and take further strides toward meeting the Millennium Development Goals. As I emphasized in my meeting with the President, in the remainder of 2005 and 2006, Zambia needs to sustain, and indeed deepen, the progress of recent years.
"Against this background, I discussed with the authorities the preparation of the National Development Plan. We agreed that further reforms are critical to support macroeconomic stability and growth. In particular, priority would be given to strengthening public expenditure management and financial accountability, financial sector reform, and governance. Creating an environment conducive to private sector development is another priority area for Zambia.
"I am encouraged by the determination and commitment by the President and his economic team to build on their commendable track record and to move ahead with their reform agenda. Such persistence with policy reforms will bring increased rewards and the IMF is committed to supporting the government of Zambia in its endeavors."
IMF EXTERNAL RELATIONS DEPARTMENT