## _cr05137

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### Executive findings and recommendation
- IMF and IDA staffs conclude Zambia has satisfactorily fulfilled the requirements for reaching the completion point under the enhanced HIPC Initiative (with noted exceptions).
- Staffs recommend Executive Directors:
  - Agree that Zambia has reached the completion point.
  - Commit enhanced HIPC Initiative resources to Zambia on an irrevocable basis as approved at the decision point.
  - Grant waivers for nonobservance of the completion point conditions regarding IFMIS, ZESCO, and ZNCB based on substantial progress and authorities’ commitments.

### Completion point conditions — status and waiver rationale
- Completion point triggers included:
  - Adoption and one-year satisfactory implementation/monitoring of a PRSP prepared through a participatory process.
  - Maintenance of a stable macroeconomic environment as evidenced by satisfactory performance under a PRGF-supported program.
  - Specific targets in education, health, and the fight against HIV/AIDS.
  - Key structural reforms in electricity and financial sectors.
  - Strengthening of public expenditure management.
- Status summary:
  - All but three triggers satisfied.
  - Not met: implementation and mid-term review of IFMIS pilot; restructuring and issuance of international bidding documents for ZESCO; full privatization of ZNCB.
  - Recommendation: grant waivers for IFMIS, ZESCO, and ZNCB conditions given substantial progress and commitments.

### Poverty Reduction Strategy (PRSP) implementation
- PRSP adopted: full PRSP covering 2002–04 adopted early 2002; IMF and IDA Boards endorsed in May 2002.
- Objectives: promote growth/diversification, improve social service delivery, address HIV/AIDS, gender inequality, environmental protection.
- Timing: original PRSP period extended to 2005; new PRSP to be developed during 2005 alongside National Development Plan 2006–2010.
- Implementation performance:
  - First Annual Progress Report (Jan 2002–June 2003): monitoring and execution of the budget for poverty-reducing programs poor; macro weaknesses impeded implementation.
  - Second Annual Progress Report (July 2003–Dec 2004) and Addendum (Feb 2005): strengthened macroeconomic policy; full funding of priority poverty-reducing programs in line with the 2004 budget; introduction of ABB classification; improved/computerized FMS.
  - Based on 2004 performance, satisfactory implementation and monitoring of the PRSP achieved for a full year in 2004.

### Macroeconomic performance (2001–2004)
- Real GDP growth averaged 4.6 percent a year during 2001–2004; decision point projected 5 percent annual growth.
- Growth was fairly broad-based and withstood shocks including a severe drought in 2002 and a sharp rise in interest rates from excessive government borrowing.
- Inflation: 17.5 percent in 2004 (annual average).
- Fiscal/monetary developments:
  - Government wage bill rose by 3 percentage points of GDP during 2000–03 to 8.4 percent (footnote referenced); held to 7.8 percent of GDP in 2004.
  - Large fiscal adjustment in 2004 narrowed domestic borrowing by more than 4 percentage points of GDP from the previous year.
  - Revenues strengthened by 0.5 percent of GDP and other expenditures were trimmed.
  - Broad money and reserve money growth exceeded program targets in 2004; by end-January 2005 BoZ mopped up much of excess reserve money via open-market operations.
- External sector:
  - Export earnings fell short of decision point projections by about 20 percent during 2000–03 mainly due to lower-than-projected copper prices.
  - Copper prices rose in excess of 50 percent in 2004.
  - External current account deficit (excluding grants) narrowed from 16.2 percent of GDP in 2003 to 11.9 percent of GDP in 2004.
  - Import cover of gross international reserves at end-2004: 1.2 months; decision point target by end 2004: 3.0 months.

### Debt relief delivery, creditor participation, and key figures
- Decision point agreed external public debt reduction: 62.6 percent (or US$2.5 billion) in 1999 NPV terms.
- IMF commitment at decision point: US$602 million (NPV).
- IDA commitment at decision point: US$488 million (NPV).
- Interim delivery as of March 2005: IMF US$452 million (NPV); IDA US$98 million (NPV).
- Total HIPC Initiative interim assistance to Zambia during the interim period: in excess of US$830 million (NPV).
- Financing assurances obtained from creditors representing 97 percent of Zambia’s total debt in NPV terms (US$2,416 million of HIPC-assistance-required NPV at end-1999).
- Multilateral share of committed HIPC assistance: US$1,331 million (1999 NPV terms).
- Paris Club creditors agreed in principle to provide almost US$1.1 billion (1999 NPV terms) on Cologne terms.
- Revised end-1999 NPV of debt, after traditional relief: US$4,002.6 million (compared with US$3,990.5 million estimated at decision point).

### Debt Sustainability Analysis (DSA) — outcomes and projections
- Updated end-2003 DSA (after full delivery of enhanced HIPC and additional bilateral relief):
  - NPV of external debt-to-exports ratio: 174 percent (end-2003, after additional bilateral relief).
  - NPV of external debt-to-exports ratio after full delivery of enhanced HIPC Initiative (without extra bilateral relief): 184 percent (end-2003).
- Preliminary end-2004 estimate: NPV debt-to-exports ratio fell to 140 percent (after full HIPC delivery and additional bilateral debt relief).
- Staff recommendation: no topping-up at completion point — not warranted given export recovery in 2004 and projections showing steady decline in the ratio.
- Baseline medium- and long-term projections (macroeconomic framework highlights):
  - Annual real GDP growth: 5 percent per year over 2004–23.
  - Inflation: reduced to 5 percent per year by 2007, held steady thereafter.
  - Investment: maintained at 22½ percent of GDP.
  - Government revenues: increase gradually to 20 percent of GDP by 2016.
  - New external borrowing: about US$120 million a year over the medium term, falling to US$105 million in 2009.
  - Debt-to-exports projections: fall below HIPC threshold of 150 percent for entire projection period; reach 90 percent by 2010; reach 53 percent by 2023.
- Debt-service outlook:
  - External debt service after full delivery of HIPC and additional bilateral relief expected to remain well below 10 percent of exports after 2004.
  - Debt service-to-exports ratio in 2004 estimated at 22 percent (mainly due to large repayments to the Fund), falling sharply to 5 percent in 2005.
  - Estimated average debt service-to-exports ratio over 2004-13: 7 percent (6 percent during 2005-13).

### Sensitivity analysis — severe-shock scenarios and outcomes
- Scenario 1: Permanent 20 percent decline in copper price beginning 2005; permanent 10 percent fall in copper production over three years; five-year additional government borrowing to maintain spending.
  - By end-2010: NPV debt-to-exports projected at 110 percent (about 20 percentage points above baseline), still below 150 percent.
  - By 2023: projected ratio 62 percent.
- Scenario 2: Lower real GDP growth and lower nontraditional export growth beginning 2005 — both only 3 percent a year; six-year additional borrowing totaling $192 million.
  - By 2010: NPV debt-to-exports projected at 104 percent (14 percentage points above baseline).
  - By end of projection period: ratio 75 percent.
- Scenario 3: 25 percent shortfall in grants beginning 2005 financed by additional borrowing totaling US$628 million.
  - By 2010: projected NPV debt-to-exports ratio 96 percent (marginally higher than baseline 94 percent).
  - By end of projection period: projected ratio 62 percent.
- Staffs’ view: baseline and sensitivity results indicate Zambia’s post-completion-point debt sustainability should withstand severe shocks; topping-up not recommended.

### Public debt management risks and reform priorities
- Key risks post-completion point:
  - Foreign currency exposure and rollover/interest-rate exposure from short-term domestic borrowing.
  - Low capacity in debt management.
- Actions and recommendations:
  - Participation in Joint IMF/World Bank Debt Reform and Capacity Building Program.
  - Public debt management reform program prepared to be implemented over next 3–5 years with technical assistance from IDA and cooperating partners.
  - Priority actions include establishing an updated consolidated debt database; strengthening IDM capacity for risk analysis and strategy formulation; addressing contingent liabilities and guarantees; consolidating public-borrowing laws; improving coordination between IDM and BoZ; and formulating a comprehensive domestic debt management strategy to promote domestic debt market development.

### Education, health, and HIV/AIDS completion-point trigger outcomes (selected indicators)
- Education:
  - Discretionary budget for Education in 2004: K 795 billion; GRZ discretionary budget for 2004: K 3866 billion.
  - 2004 education share of domestic discretionary budget: 20.6 percent; 2005 budget projects this ratio at 24.1 percent.
  - HIPC trigger: increase education share from 18.5 percent in 1999 to at least 20.5 percent — trigger met.
  - Teacher compensation: minimum monthly salary as at September 2004 for trained teachers: K 787,996; Poverty Line estimated at K 825,988 for August 2004. With a 20% rural hardship allowance, a trained teacher in a rural area would be above the poverty line — trigger met.
  - Enrollment and retention: enrollment nationwide increased by 15% between 2001 and 2003; retention in five lagging provinces increased from about 95% in 2001 to about 97% in 2003; cumulative full-cycle retention increased from 73% to 83% — trigger met.
  - 2005 budget creates fiscal space to incorporate 7000 additional teachers; Dutch government grant: Euro 9.2 million to address backlog and allowances.
- Health:
  - Malaria action plan implemented: Co-artem deployment scaled up in 28 districts in 2003; 2004: nationwide inventory of functional laboratories (April–July, 2004); RDT evaluation (Sept, 2004); frontline health worker training (Sept–Nov, 2004).
  - Diagnostic coverage: 34 percent of malaria cases diagnosed through laboratory tests.
  - Indoor Residual Spraying introduced in 5 districts during 2003/2004; plan to scale to 8 districts in 2004/2005 transmission season.
  - Procurement reform: procurement plan finalized; Medical Stores Limited tender awarded to Crown Agents on October 1, 2004.
  - Timely release of annual health expenditure data: Income and Expenditure Reports for 2001 and 2002 released in 2004; 2003 report released in early 2005.
  - Actual cash releases to District Health Management Boards target at least 80 percent: for 2004 actual cash releases stood at an average of 88.2% (reported elsewhere as 84.4% as of December 2004) — trigger met.
- HIV/AIDS:
  - Adult HIV prevalence rate at decision point: 20 percent (sentinel surveillance).
  - National HIV/AIDS/STD/TB Council (NAC) restructured in 2004; office fully operational with acting/fillings and recruitment in process.
  - HIV/AIDS integrated in pre-service and in-service programs across ten key ministries — trigger met.
  - Condom use increased among males from 28 percent in 1998 to 43 percent in 2003; among females from 24 percent in 1998 to 34 percent in 2003.
  - Number of people receiving ARVs reported increasing by approximately 2000 a month.

### Structural reforms: ZESCO commercialization and ZNCB privatization
- ZESCO:
  - Strategy shifted from sale to commercialization (government retains ownership; ZESCO operates independently/commercially).
  - Monitoring points: entry point (Dec 2003), interim point (June 2004), evaluation point (June 2005).
  - Business plan for FY starting April 1, 2005 revised and approved by ZESCO Board in late Dec 2004; all interim point actions met by Dec 2004.
  - Delay in business plan preparation implies delayed evaluation point; staff recommend waiver for nonobservance based on satisfactory progress.
  - Concessional borrowing guaranteed by government permitted up to US$40 million until end of 2005 (as part of commercialization components).
- ZNCB:
  - International bidding documents issued March 2003; negotiations with preferred bidder substantially concluded in Aug 2004 but fell through.
  - ZPA terminated negotiations on March 15, 2005; planned new invitation to bid by late March or early April 2005 for sale of 49 percent with management control.
  - Government plans to offer a 26 percent share on the Lusaka Stock Exchange following agreement with a strategic investor, reducing government ownership to 25 percent (maximum per Banking and Financial Services Act).
  - Status: trigger not fully met; staff recommend waiver based on commitment to restart privatization expeditiously.

### Public expenditure management reforms (MTEF, IFMIS, PEMFA)
- MTEF:
  - First MTEF covered 2004–06; Green Paper on 2004–06 issued October 2003.
  - 2005–07 MTEF Green Paper (October 2004) contained sectoral ceilings and was distributed to parliament and stakeholders; MTEF formed basis for 2005 budget — trigger met and sustained.
- IFMIS:
  - Objective: implement IFMIS pilot for at least three ministries and conduct mid-term review — trigger not met.
  - Preparations largely completed (IFMIS committees constituted; design completed; site preparation almost completed; LAN revamped; ABB software deployed; FMS upgraded), but contract for installation of IFMIS hardware and software not concluded.
  - IMF/IDA view: substantive progress in broader PEMFA reforms and authorities committed to initiating IFMIS pilot as soon as possible; staff recommend waiver for nonobservance.
- PEMFA advances:
  - Commitment Control System (CCS) established.
  - Activity-based budgeting (ABB) framework introduced to improve links between budgets and programs and monitoring of poverty-related spending.
  - FMS computerized to produce timely quarterly reports using ABB.

### Use and tracking of HIPC interim assistance
- Interim HIPC relief largely allocated to priority poverty-reducing programs (PRPs): infrastructure investments, support for small-scale farmers/food security, increased social sector expenditures (notably education).
- HIPC interim relief accruing to BoZ designated for debt service payments to prevent jeopardizing non-HIPC donor assistance.
- Expenditure tracking system developed with IMF/IDA to identify savings from interim HIPC debt relief; savings allocated to PRPs via a special account at BoZ; ministries submitted resource requests to MoFNP to authorize BoZ releases.
- MTEF commitment: increase spending on PRPs by at least 1.6 percentage points of GDP between 2004 and 2006.
- 2005 budget includes a wider definition of poverty-reducing expenditures for quarterly budget execution reports; with comprehensive reporting the special BoZ account procedures discontinued.

### Selected key numeric indicators (as reported)
- Decision point agreed reduction in external public debt: 62.6 percent (or US$2.5 billion) in 1999 NPV terms.
- IMF commitment at decision point: US$602 million (NPV).
- IDA commitment at decision point: US$488 million (NPV).
- Interim delivery as of March 2005: IMF US$452 million (NPV); IDA US$98 million (NPV).
- Total HIPC interim assistance during interim period: in excess of US$830 million (NPV).
- Creditor financing assurances obtained represent 97 percent of Zambia’s total debt in NPV terms.
- Decision point NPV debt-to-exports sustainability threshold: 150 percent.
- Updated end-2003 NPV debt-to-exports ratio after full delivery: 174 percent (after additional bilateral relief); 184 percent (without additional bilateral relief).
- Estimated NPV debt-to-exports ratio in 2004: 140 percent (after full HIPC delivery and additional bilateral debt relief).
- Real GDP growth averaged 4.6 percent per year during 2001–2004; decision point projected 5 percent annual growth.
- Adult HIV prevalence rate at decision point: 20 percent.
- Education share of domestic discretionary budget: 2004: 20.6 percent; 2005 (projected): 24.1 percent.
- Discretionary budget for Education in 2004: K 795 billion; GRZ discretionary budget for 2004: K 3866 billion.
- Minimum monthly salary as at September 2004 for trained teachers: K 787,996; Poverty Line estimated at K 825,988 for August 2004.
- Inflation (annual average) in 2004: 17.5 percent.
- Import cover of gross international reserves at end-2004: 1.2 months.
- Export receipts (selected outturns): 2003: 1,052 (millions); 2004: 1,217 (millions).
- Copper export receipts (outturns): 2004: 982 (millions); copper price 2004: 1.16 (US$ per pound).

### Conclusions and Board action suggested
- Staffs recommend Executive Boards of IMF and IDA:
  - Agree that Zambia has satisfactorily fulfilled the completion point requirements (with the three noted exceptions).
  - Commit resources for enhanced HIPC Initiative to Zambia on an irrevocable basis as approved at decision point.
  - Grant waivers for nonobservance of IFMIS, ZESCO, and ZNCB completion point conditions on the basis of substantial progress and authorities’ commitments.

*IMF and IDA staff assessment, Executive Summary (completion point recommendation).*

### Executive Summary ......................................................................................................

### _cr05137 - Executive Summary

### Executive Findings and Recommendation
- In the opinion of the staffs of the International Monetary Fund (IMF) and International Development Association (IDA), Zambia has satisfactorily fulfilled the requirements for reaching the completion point under the enhanced Initiative for Heavily Indebted Poor Countries (HIPC Initiative).
- The staffs recommend that Executive Directors agree with this assessment and commit resources for the enhanced HIPC Initiative to Zambia, as approved at the decision point, on an irrevocable basis.
- At the decision point in December 2000, Executive Directors agreed that Zambia’s external public debt should be reduced by 62.6 percent (or US$2.5 billion) in 1999 net present value (NPV) terms, after the full use of traditional debt-relief mechanisms.
- IMF and IDA commitments at the decision point were US$602 million and US$488 million, respectively, in NPV terms. Interim delivery as of March 2005 was US$452 million (IMF) and US$98 million (IDA).
- Financing assurances on the provision of assistance under the enhanced HIPC Initiative have been obtained from creditors representing 97 percent of Zambia’s total debt in NPV terms.
- Based on progress achieved, the staffs recommend that the IMF Board grant waivers for the nonobservance of the completion point conditions regarding ZESCO, the IFMIS, and ZNCB, and that Executive Directors agree that Zambia has made sufficient progress to reach the completion point.

### Assessment of Completion Point Conditions
- Completion point triggers comprised:
  - Adoption and one-year satisfactory implementation/monitoring of a PRSP prepared through a participatory process.
  - Maintenance of a stable macroeconomic environment as evidenced by satisfactory performance under a program supported by the PRGF.
  - Specific targets in education, health, and the fight against HIV/AIDS.
  - Implementation of key structural reforms in electricity and financial sectors.
  - Strengthening of public expenditure management.
- Status of triggers:
  - All but three completion point triggers have been satisfied.
  - Not met: implementation and review of piloting of an integrated financial management and information system (IFMIS); restructuring and issuance of international bidding documents for Zambia Electricity Supply Company (ZESCO); and full privatization of Zambia National Commercial Bank (ZNCB) (privatization process recently restarted after termination of negotiations with prior bidders).
  - Recommendation: Grant waivers for nonobservance of IFMIS, ZESCO, and ZNCB conditions based on substantial progress and authorities’ commitments.

### Implementation of the Poverty Reduction Strategy (PRSP)
- A full PRSP covering 2002–04 was adopted in early 2002 and endorsed by the IMF and IDA Boards in May 2002.
- The PRSP aims to promote growth and diversification in production and exports, improve delivery of social services, and address HIV/AIDS, gender inequality, and environmental protection.
- The original PRSP period was extended by a year to 2005 to overlap with the Transitional National Development Plan (TNDP); a new PRSP will be developed during 2005 alongside a new National Development Plan for 2006–2010.
- Implementation:
  - First Annual Progress Report (January 2002–June 2003) indicated that satisfactory implementation still needed to be established; monitoring and execution of the budget for poverty-reducing programs was poor and implementation was impaired by weaknesses in macroeconomic management.
  - Second Annual Progress Report (July 2003–December 2004) and Addendum (released February 2005) show strengthened macroeconomic policy, full funding of priority poverty-reducing programs in line with the 2004 budget, introduction of an activities-based budget (ABB) classification, and improved/computerized financial management system (FMS).
  - Based on performance in 2004, IMF and IDA staffs conclude satisfactory progress with implementing and monitoring the PRSP was achieved for a full year in 2004.

### Macroeconomic Performance and Stability
- Since the decision point in December 2000, the Zambian economy performed relatively well though policy implementation was uneven and inflation remained to be fully controlled.
- Real GDP growth averaged 4.6 percent a year during 2001–2004, compared with the 5 percent annual growth projected at decision point.
- Growth was fairly broad-based, extending beyond mining, and withstood shocks including a severe drought in 2002 and a sharp rise in interest rates caused by excessive government borrowing.
- The staffs consider macroeconomic performance under PRGF-supported arrangements satisfactory for completion point purposes.

### Debt Relief Delivery and Debt Sustainability Analysis (DSA)
- Decision point projection: full delivery of assistance would lower Zambia’s NPV of external public debt to exports to the enhanced HIPC Initiative threshold of 150 percent (based on end-1999 parameters and debt stocks).
- Updated DSA using end-2003 debt data and parameters:
  - After full delivery of enhanced HIPC Initiative assistance and additional bilateral debt relief, the NPV of debt-to-exports ratio was 174 percent, 13 percentage points above the decision point projection.
  - The NPV of debt-to-exports ratio is estimated to have fallen to 140 percent in 2004 and is projected to decline steadily thereafter.
  - On this basis, the staffs do not recommend a topping-up of debt relief at the completion point.
- Interim assistance delivered during the interim period exceeded US$830 million in NPV terms (including IMF, IDA, AfDB, OPEC Fund, EU, and Paris Club interim relief).
- Creditor participation:
  - Government requested enhanced HIPC Initiative debt relief from non-Paris Club bilateral and commercial creditors.
  - Some non-Paris Club bilateral creditors provided partial relief.
  - Financing assurances obtained from creditors representing 97 percent of Zambia’s total debt in NPV terms.
- Sensitivity analysis:
  - Indicates Zambia’s post-completion-point debt sustainability should withstand severe shocks such as a sizeable permanent fall in the price of copper, substantially slower economic growth, or a significant shortfall in donors’ grants.

### Public Debt Management
- Government’s capacity for public sector debt management is relatively low.
- Zambia participates in the joint IMF/World Bank Debt Reform and Capacity Building Program.
- An assessment of main challenges was undertaken in May 2004.
- With technical assistance from IDA and other cooperating partners, government has prepared a public debt management reform program to be implemented over the next few years to remedy capacity weaknesses.

### Key Numeric Figures and Indicators (as reported)
- Decision point agreed reduction in external public debt: 62.6 percent (or US$2.5 billion) in 1999 NPV terms.
- IMF commitment at decision point: US$602 million (NPV).
- IDA commitment at decision point: US$488 million (NPV).
- Interim delivery as of March 2005: IMF US$452 million (NPV); IDA US$98 million (NPV).
- Total HIPC Initiative interim assistance to Zambia during the interim period: in excess of US$830 million (NPV).
- Creditor financing assurances obtained represent 97 percent of Zambia’s total debt in NPV terms.
- Decision point NPV debt-to-exports sustainability threshold: 150 percent.
- Updated end-2003 NPV debt-to-exports ratio after full delivery: 174 percent.
- Estimated NPV debt-to-exports ratio in 2004: 140 percent.
- Real GDP growth averaged 4.6 percent per year during 2001–2004; decision point projected 5 percent annual growth.

### Conclusions and Board Action Suggested
- The staffs recommend that the Executive Boards of the IMF and IDA:
  - Agree that Zambia has satisfactorily fulfilled the completion point requirements (with noted exceptions) and reach the completion point under the enhanced HIPC Initiative.
  - Commit resources for the enhanced HIPC Initiative to Zambia on an irrevocable basis as approved at the decision point.
  - Grant waivers for the nonobservance of the three completion point conditions regarding IFMIS, ZESCO, and ZNCB, on the basis of substantial progress and authorities’ commitments.

*IMF and IDA staff assessment, Executive Summary (completion point recommendation).*

### 20.5 percent.

### _cr05137 - 20.5 percent.

### Education Sector: budgetary allocations and teacher compensation
- Discretionary budget for Education in 2004: K 795 billion.
- Discretionary budget for GRZ as a whole for 2004: K 3866 billion.
- Ratio for the 2004 budget (Education share of domestic discretionary budget): 20.6%.
- Budget for 2005 puts this ratio at 24.1%.
- Trigger in HIPC program: increase share of education in the discretionary budget from 18.5 percent in 1999 to at least 20.5 percent.
  - Based on MoFNP data, education share was 21.4 percent (actual outturn) in 2003.
  - Share in 2004: 20.6 percent; share of the Ministry of Education in the domestic discretionary budget is to be 24.1 percent in 2005. This trigger was met.
- Raising the starting compensation of teachers in rural areas above the poverty line:
  - Minimum monthly salary as at September 2004 for trained teachers: K 787,996.
  - Poverty Line estimated at K 825,988 for August 2004.
  - With the 20% rural hardship allowance, a trained teacher in a rural area would be above the poverty line. This trigger was met.
- Actions to increase student retention in Northern, Luapula, Eastern, Northwestern, and Western Provinces:
  - Measures taken: (i) deployment policy that 100% of newly qualified teachers should be posted to rural areas; (ii) elimination of PTA fees as user fees in Grades 1-7 following Free Education policy introduced in 2002.
  - Enrollment nationwide increased by 15% between 2001 and 2003.
  - Retention rates among the five relatively lagging provinces increased from about 95% in 2001 to about 97% in 2003.
  - Cumulative full-cycle retention rate increased from 73% to 83% in these provinces. This trigger was met.
- Enrollment and pupil/teacher ratios:
  - Increased enrollment at all levels since 2000 led to higher pupil/teacher ratios.
  - 2005 budget creates fiscal space to incorporate 7000 additional teachers.
  - Dutch government grant: Euro 9.2 million to settle backlog of retirement and associated repatriation allowances and to provide for part of settling in allowances of new teachers.

### Health Sector: procurement, cash releases, and malaria action
- Action plan for malaria: Implemented.
  - Deployment of Co-artem scaled up in 28 districts in 2003.
  - 2004 activities: countrywide inventory of functional laboratories (April–July, 2004); evaluation exercise of RDTs (Sept, 2004); training of frontline health workers in use of Co-artem in all provinces and districts (Sept–Nov, 2004).
  - Plan developed to increase number of functional laboratories in years 2005 and 2006.
- Procedures and mechanisms for procurement of drugs reorganized to be fully transparent and efficient: Implemented.
  - Procurement plan for the entire health sector finalized and distributed to all stakeholders including Cooperating Partners.
  - All procurements continue to be done by the Central Board of Health.
  - Tender for Medical Stores Limited concluded; contract awarded to Crown Agents on October 1, 2004. Business Plan presented September 30, 2004; Cooperating Partners agreed in principle to fund the plan subject to quarterly division of activities and budgets.
- Timely release of complete, detailed, annual health expenditure data: Implemented.
  - Income and Expenditure Reports for 2001 and 2002 released; 2003 report released in early 2005.
- Actual cash release to District Health Management Boards target: at least 80 percent of the amount budgeted.
  - For 2004, actual cash releases stood at an average of 88.2% (Box 1) of the amount budgeted; elsewhere in the text reported as 84.4% as of December 2004. The trigger was met.

### HIV/AIDS response and multisector integration
- Adult HIV prevalence rate: 20 percent based on sentinel surveillance at the time of the decision point.
- National HIV/AIDS/STD/TB Council (NAC):
  - Employed four managers in 2001.
  - New organizational structure developed in 2004; recruitment in process; office currently fully operational.
  - Current staffing (acting/filled positions): Acting Director General; three Directors (Programs, Administration and MIS); an Acting Program Manager; an Internal Auditor; an Information and Communication Specialist; a Management Information System Specialist; several support staff. Recruitment interviews conducted for a range of additional specialist and support positions.
- Integration of HIV/AIDS awareness and prevention in pre-service and in-service programs:
  - Integrated in Ministries of Health, Education, Agriculture, Science and Technology, Community Development, Tourism, Commerce, Home Affairs, Finance and National Planning, and Youth, Sport and Child Development (ten key ministries). Other line ministries also have awareness programs integrated. This trigger was met.
- Behavioral and service access indicators:
  - Condom use increased among males from 28 percent in 1998 to 43 percent in 2003.
  - Condom use increased among females from 24 percent in 1998 to 34 percent in 2003.
  - Number of people receiving ARVs reported to be increasing by approximately 2000 a month.

### Key structural reforms and privatization efforts
- Restructuring and issuance of international bidding documents for sale of a majority (controlling) interest in ZESCO: Not Implemented.
  - Alternative strategy: commercialization of ZESCO agreed in April 2003 between GRZ, IDA, and the IMF; satisfactory progress reported in implementation of commercialization strategy.
- Issuance of international bidding documents for sale of a majority interest in Zambia National Commercial Bank (ZNCB): Not Fully Implemented.
  - May 2002: international bidding documents issued for sale of a 51 percent share.
  - March 2003: revised bidding documents issued to reflect divestiture of a 49 percent share with management control.
  - Government selected preferred and reserve bidders in May 2003.
  - Negotiations with preferred bidder substantially concluded in August 2004; preferred bidder unable to secure board approval; no agreement with reserve bidder.
  - ZPA terminated negotiations with preferred and reserve bidders on March 15, 2005, and planned to issue a new invitation to bid by late March or early April 2005.

### Public expenditure management and IFMIS/MTEF
- Implementation by MoFED of an Integrated Financial Management Information System (IFMIS) on a pilot basis for at least three ministries and a mid-term review of the pilot: Not Implemented.
  - Preparations largely completed: IFMIS management and technical committees constituted; IFMIS design completed; site preparation almost completed; LAN infrastructure at MoFNP revamped for IFMIS pilot.
  - Contract for installation of IFMIS hardware and software not concluded; trigger not met.
- Implementation of a Medium-Term Expenditure Framework (MTEF) prepared by MoFED and approved by Cabinet: Implemented.
  - Processes constituting an MTEF introduced over last two years.
  - Release of the medium-term budget framework paper (the Green Paper) in October 2004, which included indicative sectoral ceilings, indicates practical implementation.

### Macroeconomic performance and external sector
- Inflation: 17.5 percent in 2004 (annual average).
- Growth and investment:
  - Investment strong in recent years, particularly in mining, agricultural, and tourism sectors.
  - Growth performance improved significantly by 2004.
- Fiscal and monetary developments:
  - Government wage bill rose by 3 percentage points of GDP during 2000–03 to 8.4 percent (footnote reference).
  - 2004 program achievements: large fiscal adjustment narrowed domestic borrowing by more than 4 percentage points of GDP from the previous year.
  - Wage bill held to 7.8 percent of GDP in 2004.
  - Revenues strengthened by 0.5 percent of GDP and other expenditures were trimmed.
  - Broad money and reserve money growth exceeded program targets in 2004 partly because of large end-year transfers to commercial bank accounts by government and private corporations from abroad.
  - By end-January 2005, BoZ had mopped up much of the excess in reserve money mainly through open-market operations.
- External account and reserves:
  - Export earnings fell short of decision point projections by about 20 percent during 2000–03 due mainly to lower-than-projected copper prices.
  - Copper prices rose in excess of 50 percent in 2004.
  - External current account deficit (excluding grants) narrowed from 16.2 percent of GDP in 2003 to 11.9 percent of GDP in 2004.
  - Decision point projection for 2004 current account deficit: 10.6 percent of GDP.
  - Import cover of gross international reserves at end-2004: 1.2 months; decision point target by end 2004: 3.0 months of imports.
- IMF assessments:
  - Zambia met the trigger on maintenance of a stable macroeconomic environment as evidenced by satisfactory performance under a program supported by a PRGF arrangement.
  - Completion of the second review under the PRGF arrangement was expected to establish the minimum of six months of satisfactory performance required before reaching HIPC completion point for countries with extended interruptions.

*Source: _cr05137 - 20.5 percent.*

### 22.      Third, to improve transparency and access to information on expenditure allocation,

### _cr05137 - 22.      Third, to improve transparency and access to information on expenditure allocation,

### Health expenditure transparency and public reporting
- Government agreed to the timely release of complete, detailed, annual health expenditure data.
- The Income and Expenditure Reports for 2001 and 2002 were finalized in 2004; this was the first time such detailed data on public health sector activities have been released to the public.
- The 2003 report was released in early 2005.
- Status: "This trigger was therefore met."

### Malaria control actions and service delivery scale-up
- At decision point, government committed to implement and scale up an action plan for malaria.
- Deployment of Co-artem® scaled up in selected 28 pilot districts.
  - Timeline actions in 2003: training of Health Worker in Co-artem® use (January); introduced Co-artem® in 7 sentinel districts (February); trained front line health workers in the use of Co-artem® in 28 districts (July); deployed Co-artem® in 28 districts (November).
- In 2004, the Ministry carried out a nationwide inventory of functional laboratories and conducted an evaluation exercise of its Rapid Diagnostic Tests (RDTs).
- Diagnostic coverage: "Currently, 34 percent of malaria cases are diagnosed through such laboratory tests."
- Vector control and spraying:
  - Increased distribution of Insecticide Treated Nets in all districts.
  - Introduced Indoor Residual Spraying in 5 districts (Livingstone, Ndola, Kitwe, Kabwe and Lusaka) during the 2003/2004 transmission season.
  - Plan to scale Indoor Residual Spraying during the 2004/2005 transmission season to cover 8 districts (from the initial 5): Kitwe, Ndola, Kabwe, Lusaka and Livingstone.
- Lab capacity buildout:
  - Plan to increase the number of functional laboratories in 2005 and 2006 by training staff for RDTs in 28 districts by the end of 2004/2005 transmission season.
- Status: "This trigger was therefore met."

### Health ministry restructuring and payroll plans
- Government is restructuring the health ministry to improve prospects of meeting MDG health targets.
- A revised and, most likely, increased establishment (payroll) for the Ministry is to be agreed upon during 2005 and implemented in a phased manner over the next few years, taking into account human capacity and budgetary constraints facing Zambia.

### Key structural reforms: objectives and instruments
- Two structural reform triggers targeted divestiture to reduce fiscal burden of public enterprises and extend provision/quality of essential services in electricity and financial sectors.
- Priority state enterprises: ZESCO (energy utility) and Zambia National Commercial Bank (ZNCB).

### ZESCO commercialization strategy, timeline, and status
- 2003 understanding: pursue commercialization of ZESCO (government retains ownership; ZESCO to operate independently and commercially).
- Monitoring/review points: entry point (December 2003), interim point (June 2004), evaluation point (June 2005).
- Alternative completion-point trigger identified: completion of all interim point actions and preparation/approval/adoption by ZESCO’s Board of a satisfactory annual business plan.
- Implementation progress:
  - Business plan for financial year starting April 1, 2005, was revised and approved by ZESCO’s Board in late December 2004.
  - All interim point actions had been met by December 2004, including contracting an expert to strengthen ERB capacity.
  - Actions taken under the entry point were sustained.
- Delay: Preparation delay of the business plan implies a delayed evaluation point to encompass assessment of a full year’s performance under the plan.
- Recommendation: IMF staff recommend granting a waiver for nonobservance of HIPC completion point conditions regarding restructuring and privatization of ZESCO, based on satisfactory progress to date.

### Box 2 summary — Commercialization of ZESCO: key components and staged implementation
- Four broad areas of the commercialization strategy:
  - Revision of legal provisions relating to ZESCO (Articles of Association, Electricity Act and ERB Act, separate act permitting private/public partnerships).
  - Commercial operations: operate on commercial basis, formulate/implement business plan, collect amounts owed by government, absence of financial support from government, constraints on concessional debt guarantees.
  - Outstanding obligations: settle arrears (including RAMCOZ, central and local government arrears) and clarify outstanding tax liabilities.
  - Concessional borrowing: new concessional borrowing guaranteed by government permitted up to US$40 million until the end of 2005.
- Three-stage implementation:
  - Entry point—December 2003: ten measures implemented by December 2003 and sustained.
  - Interim point—June 2004: four measures; all actions implemented by December 2004.
  - Evaluation point—June 2005: three further measures (settlement plans for arrears owed by government agencies and by RAMCOZ; ex-post evaluation of business plan preparation/implementation and management performance). Designated "Forthcoming measure."

### ZNCB privatization process and status
- Completion-point trigger: issuance of international bidding documents for sale of a majority (controlling) interest in ZNCB.
- International bidding documents were issued in March 2003.
- Subsequent outcome:
  - Prolonged negotiations with selected preferred and reserve bidders could not be successfully concluded.
  - Zambia's Privatization Agency (ZPA) board terminated the negotiations on March 15, 2005, to issue a new invitation to bid for sale of 49 percent equity in ZNCB with management control as soon as possible (by late March or early April 2005).
  - Government plans to offer a 26 percent share of ZNBC on the Lusaka Stock Exchange, following agreement with a strategic investor, which would reduce government’s ownership to 25 percent (the maximum share allowed by a single entity under the Banking and Financial Services Act).
- Status: "This trigger was therefore not fully met."
- Recommendation: IMF staff recommend granting a waiver for the nonobservance of the HIPC completion point condition regarding issuing bidding documents for the sale of the ZNCB, based on authorities’ commitment to restart privatization expeditiously.

### Financial sector development plan (FSDP)
- Government prepared a comprehensive FSDP in 2004, drawing on recommendations of the IMF/IDA Financial Sector Assessment Program mission (2003).
- Implementation supported by cooperating partners.
- Expected benefits: more efficient financial intermediation, deepening of the sector, and initiatives to facilitate increased access to financial services by the rural and urban poor.

### Public expenditure management reforms (PEMFA)
- Two HIPC triggers aimed at PEMFA:
  - Implementation of a Medium-Term Expenditure Framework (MTEF) prepared by MoFED and approved by Cabinet.
  - Implementation by MoFED of an Integrated Financial Management Information System (IFMIS) on a pilot basis for at least three ministries and a mid-term review of the pilot program.
- Progress achieved with donor support, in line with IDA’s PEMFA Review and December 2003 joint IMF/IDA HIPC assessment and action plan.
- Government actions to strengthen PEMFA:
  - Put in place a Commitment Control System (CCS).
  - Introduced an activity-based budgeting (ABB) framework to improve links between budgets and programs and to facilitate prioritization and monitoring of expenditures, particularly poverty-related spending.
  - Upgraded and modified the Financial Management System (FMS) to produce timely quarterly reports using ABB; FMS computerized.

### Medium-Term Expenditure Framework (MTEF) status
- First MTEF covered 2004–06 and prepared as background for the 2004 budget.
- October 2003: government issued first consultative "Green Paper" on the 2004–06 MTEF outlining macroeconomic and fiscal frameworks.
- Consultative process included president, cabinet, members of parliament, and provincial stakeholders; promoted transparency and ownership.
- 2005–07 MTEF Green Paper (October 2004) improvements:
  - Contained sectoral budget ceilings.
  - Distributed to parliament and stakeholders for discussion.
  - Line ministries, provinces, and agencies prepared activity-based and bottom-up budget for 2005–07.
  - MTEF submitted to cabinet and formed the basis for the 2005 budget proposal to parliament in January 2005.
- Status: "Based on these developments, the trigger with respect to the MTEF was met and has been sustained."

### IFMIS implementation status
- Objective: implement a computerized financial management information system to aid strategic management, produce timely/accurate financial reports, improve monitoring, and strengthen controls.
- Status: "This trigger has not been met" due to weak implementation capacity and protracted procurement difficulties partly outside authorities’ control.
- Preparatory achievements:
  - IFMIS management and technical committees constituted.
  - IFMIS design completed.
  - Preparation of sites almost completed.
  - An ABB software that can accommodate a 3-year planning horizon has been deployed.
  - FMS upgraded to report using ABB classification.
  - Local Area Network (LAN) at MoFNP revamped to accommodate ABB and FMS data and, in due course, the IFMIS pilot.
- IMF/IDA view: substantive progress in broader PEMFA reforms; authorities remain committed to initiating the IFMIS pilot as soon as possible.
- Recommendation: IMF staff recommend granting a waiver for nonobservance of HIPC completion point conditions regarding initiation and review of the IFMIS pilot, based on commitment and broader progress.

### Use of HIPC interim assistance and expenditure tracking
- Budgetary savings from interim HIPC debt relief have been used broadly in line with decision point criteria.
- HIPC interim relief accruing to the Bank of Zambia (BoZ) was designated for debt service payments, given large debt service obligations that could have threatened non-HIPC donor assistance.
- The remainder mostly allocated to priority poverty-reducing programs (PRPs) focusing on:
  - Investments in infrastructure.
  - Support for small-scale farmers and food security.
  - Increased expenditures in social sectors, particularly education.
- Expenditure tracking system:
  - Developed by government in consultation with IMF and IDA staff to identify savings from interim HIPC debt relief.
  - Savings of debt service accruing to government were allocated to priority poverty-reducing programs.
  - Funding for these programs was channeled through a special account at the BoZ.
  - Ministries/agencies executing priority programs were required to submit resource requests to the MoFNP, which would authorize BoZ releases.
- MTEF commitment: government committed to increasing spending on PRPs by at least 1.6 percentage points of GDP between 2004 and 2006.
- Budget reporting changes:
  - 2005 budget includes a wider definition of poverty-reducing expenditures to be used in quarterly budget execution reports.
  - With comprehensive reporting on poverty-related expenditure (including all financing sources), the special BoZ account procedures have been discontinued.

*Italic: Extracted from the provided IMF content unit.*

### 40.      An updated reconciliation of debt data conducted by the staffs of IDA and the IMF,

### An updated reconciliation of debt data conducted by the staffs of IDA and the IMF

### Reconciliation findings and impact on HIPC decision-point estimates
- An updated reconciliation of debt data by IDA and IMF staffs, together with the Zambian authorities, indicates that a revision to the amount of HIPC Initiative assistance calculated at decision point is not necessary.
- New creditor information and revisions to the terms of loans for some multilateral creditors result in an upward revision of less than 1 percent of the overall NPV of debt as of end-1999, after traditional debt relief.
- In accordance with enhanced HIPC Initiative guidelines, staffs have not changed their assessment of:
  - Required debt relief at decision point: US$2,499 million in NPV terms.
  - Corresponding common reduction factor: 62.6 percent.
- Main revisions (NPV terms):
  - Multilateral creditors:
    - AfDB Group, the OPEC Fund, and IFAD: increase in NPV of debt by US$14.9 million.
    - EEC: downward revision by US$0.93 million due to revised debt service profile.
    - EIB: upward revision by US$0.33 million due to revised debt service profile.
    - Reclassification of European Economic Community-IDA administered loans from multilateral credits to Paris Club bilateral credits: downward revision of US$1.9 million.
    - Net addition to debt owed to multilateral creditors: US$12.4 million in NPV terms.
  - Bilateral creditors:
    - Additions: loans from the United States, Brazil, and France and reclassification of IDA-administered EEC loans increased bilateral NPV by US$11.7 million.
    - Subtractions: loans amounting to US$6.1 million in NPV terms removed for Italy (arose out of a prior Paris Club rescheduling agreement but were subsequently not made effective).
    - Net addition to bilateral debt: US$5.6 million in NPV terms.
- Revised end-1999 NPV of debt, after full implementation of traditional debt relief mechanisms: US$4,002.6 million compared to US$3,990.5 million estimated at the decision point.
- Footnote: The total net increase in the NPV of debt is US$18.8 million, but falls to US$12.1 million after traditional debt relief.

### Status of creditor participation
- Creditors representing 97 percent (US$2,416 million in end-1999 NPV terms) of HIPC Initiative debt relief estimated to be required at the decision point have given satisfactory financing assurances.
- Based on financing assurances:
  - Multilateral creditors account for 53 percent of total committed HIPC Initiative assistance.
  - Bilateral creditors account for 44 percent.
- Paris Club and most multilateral creditors have provided interim assistance.
- Zambian authorities are making efforts to obtain HIPC Initiative debt relief from nonparticipating creditors.

### Multilateral creditors — committed assistance and interim delivery
- Total multilateral creditor debt relief under enhanced HIPC Initiative: US$1,331 million in 1999 NPV terms.
- IDA, the IMF, the AfDB, the EU, and the OPEC Fund have granted interim assistance.
- IFAD and BADEA have committed to provide required assistance once Zambia reaches completion point.
- Assistance specifics:
  - IDA:
    - Debt relief approved at decision point: $488 million in 1999 NPV terms.
    - Delivery mechanism: reduction of 84 percent of the debt service falling due to IDA until 2003 and an average of 64 percent thereafter on debt service on disbursed and outstanding credits to IDA as of end-December 1999.
    - Projected cumulative nominal assistance over 2001–20: US$885 million.
    - Interim assistance included: US$98 million.
  - IMF:
    - Debt relief: SDR 469 million (US$602 million) in 1999 NPV terms.
    - Delivery: grants from the PRGF-HIPC Trust to Zambia’s Umbrella Account.
    - Exceptional interim assistance decision: 75 percent of total IMF HIPC Initiative assistance to Zambia; total SDR351 million provided as interim assistance through end-2003.
    - Interim assistance covered approximately 69 percent of Zambia’s principal repayments falling due to the IMF during 2001-03.
    - Remaining assistance would nearly cover large principal repayments in 2005, with smaller amounts available for 2006-07.
  - AfDB Group:
    - Debt relief: US$146 million in 1999 NPV terms.
    - Assistance provided since January 2001: US$61 million in nominal terms.
    - Interim assistance halted in October 2003 when cumulative limit of 40 percent of total NPV of debt relief committed was reached.
    - Interim assistance provided through reduction of 76.8 percent in debt service payments to AfDB Group over Jan 2001–Oct 2003.
    - Will resume after completion point through an 80 percent reduction in debt-service payments due until 2014.

### Bilateral and commercial creditors
- Paris Club creditors:
  - Agreed in principle to provide assistance on Cologne terms amounting to almost US$1.1 billion in 1999 NPV terms.
  - Provided interim assistance via flow relief under Cologne terms (a debt reduction of 90 percent in NPV terms).
  - Goodwill clause: participating countries will, at completion point, make necessary effort to enable Zambia to reach HIPC threshold in context of equitable burden sharing.
  - Remaining assistance at completion point to be delivered through a stock-of-debt operation on Cologne terms.
  - Most Paris Club creditors indicated intention to provide debt relief beyond enhanced HIPC Initiative requirements, estimated at US$87 million in NPV terms as of end-2003.
- Non-Paris Club bilateral and commercial creditors:
  - Expected to provide treatment comparable to Paris Club; total under enhanced HIPC Initiative: US$79 million in 1999 NPV terms.
  - Specific actions:
    - India: full relief on official debt and a 50 percent write-off of commercial debt.
    - China: wrote off selected loans (without bilateral reconciliation) at the decision point.
    - Czech Republic: received settlement through a buyback priced at 11 U.S. cents to the U.S. dollar.
    - Romania: debt reduced by 67 percent (now held by a commercial entity).
  - Other non-Paris Club countries and commercial creditors have yet to signal willingness to provide debt relief.
  - Zambian authorities continue efforts to obtain comparable treatment.

### Updated Debt Sustainability Analysis — External debt at end-2003
- Reconciliation:
  - DSA updated jointly by Zambian authorities and IDA and IMF staffs.
  - Stock of debt disbursed and outstanding updated based on end-2003 loan-by-loan information from authorities and reconciled with creditor statements.
  - Reconciliation rate: in excess of 94 percent of total debt outstanding and disbursed as of end-2003.
  - Exchange rates and discount rates used for calculating nominal and NPV debt as of end-2003 are presented in Table 8 (table not reproduced here).
- Nominal stock of disbursed and outstanding external debt:
  - End-2003: US$7,000 million.
  - End-1999: US$6,459 million.
  - Composition of end-2003 nominal total:
    - 56 percent owed to multilateral creditors.
    - 43 percent owed to bilateral creditors.
    - Less than 1 percent owed to commercial creditors.
    - Largest official creditor at end-2003: IDA, accounting for 34 percent of total debt in nominal terms.
- NPV of debt at end-2003, after full application of traditional debt relief mechanisms:
  - US$4,872 million, equivalent to 432 percent of exports of goods and non-factor services (three-year average).
- After full delivery of HIPC Initiative debt relief:
  - NPV of external debt reduced to US$2,078 million, equivalent to 184 percent of exports.
  - This is 34 percentage points higher than the 150 percent debt sustainability threshold and 23 percentage points higher than the decision point projection for end-2003.
- Taking into account additional bilateral debt relief:
  - NPV of external debt reduced to US$1,958 million, equivalent to 174 percent of exports.

### Factors explaining the increase in the NPV of debt-to-exports ratio between end-1999 and end-2003
- Overall change:
  - NPV of debt-to-exports ratio, assuming full delivery of HIPC assistance, increased by 34 percentage points between end-1999 and end-2003, to 184 percent.
  - Of this increase, 23 percentage points represent the unanticipated change relative to the decision point.
- Key contributing factors:
  - Changes in exchange rates and discount rates used to calculate U.S. dollar value of NPV of external debt and new borrowing are key drivers.
  - Export growth over 1999-2003 lowered the ratio but was considerably slower than projected at decision point.
  - New borrowing during 1999-2003 was lower than projected, which reduced the actual debt-to-exports ratio at end-2003 relative to projections.
- Quantified contributions to the change in the ratio (Decision point to end-2003):
  - End-1999 NPV of debt-to-exports ratio: 150.0 percentage points.
  - Anticipated end-2003 NPV of debt-to-exports ratio at decision point: 161.0 percentage points.
  - Factors (percentage points):
    - New borrowing (2000-03): 74.5 anticipated; -7.4 unanticipated; total contribution 67.1.
    - Export growth (2000-03): -63.5 anticipated; 34.5 unanticipated; total contribution -29.1.
    - Changes in parameters (total): 27.5 (of which due to discount rates: 19.8; due to exchange rates: 7.8).
    - Change in HIPC relief delivery assumptions: -28.4 (mainly represents lower-than-projected delivery of HIPC debt relief during the interim period).
    - Other factors: -2.8 (includes revisions in the end-1999 database).
  - End-2003 NPV of debt-to-exports ratio:
    - Anticipated: 161.0
    - Unanticipated: 184.4
    - Total: 184.4
  - Memorandum:
    - End-2003 NPV of debt-to-exports ratio after bilateral debt relief beyond HIPC: 174.9
- Notes:
  - All figures assume full delivery of HIPC Initiative debt relief.
  - Based on actual end-2003 debt stocks, discount rates, exchange rates, and the three-year backward-looking average of exports of goods and services.
  - Contribution to exchange rate effect is less pronounced for Zambia owing to large share of Japanese Yen in total stock of debt and Yen depreciation against U.S. dollar over 2000–03.

### External debt outlook, 2004–23 — macro framework and projections
- Macroeconomic framework (underlying DSA, based on PRGF-supported program and MTEF):
  - Annual real GDP growth: projected steady at 5 percent per year over 2004–23.
  - Inflation: reduced to 5 percent per year by 2007 and held steady thereafter.
  - Investment: maintained at 22½ percent of GDP.
  - Government domestic borrowing needs: reduced to about ½ percent of GDP by 2007.
  - Government revenues: assumed to increase gradually to 20 percent of GDP by 2016.
  - New external borrowing (excluding IMF disbursements):
    - About US$120 million a year over the medium term, mostly from IDA and AfDB.
    - Falls to US$105 million in 2009 as grants increase; remains constant in real terms thereafter.
  - Export volume assumptions:
    - Strong medium-term growth reflecting investments in mining and agriculture.
    - Long term: 4 percent annual growth (mining exports ~2 percent; other exports ~7 percent).
  - Current account deficit (including official transfers): declines from nearly 5 percent of GDP in 2004 to just over 2 percent by 2014–23.
  - Gross official reserves: grow to nearly 6 months of imports by end of projection period.
- Box 3 summary of macro assumptions (highlights):
  - Real GDP growth: 5 percent a year.
  - Inflation target: 5 percent by 2007.
  - Investment: about 22½ percent of GDP.
  - Government revenues: rise to 19 percent of GDP by 2011 and 20 percent by 2016.
  - Gross domestic investment: steady at about 22½ percent of GDP.
  - Gross national saving (after official transfers and debt relief): 18–19 percent of GDP.
  - Foreign direct investment: projected to fall to about 5 percent of GDP a year.
- Debt-to-exports ratio projections:
  - End-2003 level: (baseline) 184 percent after full HIPC delivery (174 percent after additional bilateral relief).
  - Preliminary end-2004 estimate: NPV of debt-to-exports ratio fell to 140 percent after full delivery of HIPC Initiative and additional bilateral debt relief.
    - Main driver: very strong increase in export receipts in 2004; substantial repayments to the IMF in 2004 also contributed.
  - Medium- and long-term projections:
    - Ratio falls further and remains below HIPC threshold of 150 percent for entire projection period.
    - Reaches 90 percent by 2010.
    - Reaches 53 percent by 2023.
    - Average level of the ratio over 2003-13 projected at 105 percent (compared with 143 percent average for non-HIPC low-income countries).

*Source: Staffs of IDA and the IMF, together with the Zambian authorities, as presented in the updated reconciliation and DSA text.*

### 58.      External debt service after full delivery of HIPC Initiative and additional bilateral

### 58.      External debt service after full delivery of HIPC Initiative and additional bilateral

### Debt service projections and key statistics
- External debt service after full delivery of HIPC Initiative and additional bilateral relief is expected to remain well below 10 percent of exports after 2004.
- The debt service-to-export ratio in 2004 is estimated at 22 percent (mainly because of large repayments to the Fund before falling sharply to 5 percent in 2005.
- The estimated average debt service-to-exports ratio over the 2004-13 period is 7 percent (6 percent during 2005-13) reflecting the impact of debt relief and the high concessionality of new debt.
- This average is also well below the average for non-HIPC low-income countries (15 percent).
- Large PRGF repayments account for more than half of total debt service in 2004.

### Sensitivity analysis: overview and baseline resilience
- Staffs analyzed three relatively severe shocks; results indicate Zambia’s debt after HIPC Initiative assistance would remain well within a manageable range.
- Favorable starting position under the baseline: modest new external borrowing and strong export recovery in 2004, with exports projected to maintain a high level given ongoing investments in export sectors.
- The denominator in the NPV of debt-to-exports ratio is the 3-year average of export earnings ending in the current year; strong reductions in the ratio are expected in 2005 and, to a lesser extent, in 2006.
- The NPV of disbursements under the PRGF arrangement approved in June 2004 is lower than that of the repayments.

### Sensitivity scenario 1: Lower copper prices and lower copper export volumes
- Assumptions:
  - Beginning in 2005, a permanent 20 percent decline in the price of copper relative to the baseline projection (the baseline already incorporates a 29 percent drop in copper prices by 2007).
  - Over a three-year adjustment period, copper production falls permanently by 10 percent.
  - For a five-year period, government borrows additional funds to maintain spending levels due to a shortfall in revenues from slightly lower GDP growth.
- Outcomes:
  - By the end of the projection period, exports are 16 percent lower than in the baseline.
  - The stock of debt and debt service falling due is only slightly higher.
  - NPV of debt-to-exports at end-2010 is projected to be 110 percent, or about 20 percentage points above the baseline, well below the enhanced HIPC Initiative threshold of 150 percent.
  - For 2023, the debt-to-exports ratio is projected to be 62 percent, or 7 percentage points higher than in the baseline.

### Sensitivity scenario 2: Lower real GDP growth and lower non-traditional export growth
- Assumptions:
  - Beginning in 2005, real GDP growth and nontraditional export volume growth are only 3 percent a year (compared with 5 percent and 7 percent, respectively, in the baseline).
  - Government revenues fall in line with lower GDP figures.
  - For a six-year period, government borrows additional funds totaling $192 million to maintain spending levels.
- Outcomes:
  - NPV of debt-to-exports ratio for 2010 is projected to be 104 percent, or 14 percentage points higher than in the baseline.
  - By the end of the projection period, exports are 28 percent lower than in the baseline, giving a debt-to-exports ratio of 75 percent, or 20 percentage points higher than in the baseline.

### Sensitivity scenario 3: Increased borrowing to meet a shortfall (25 percent) in grants
- Assumptions:
  - Real GDP growth and exports remain unchanged from the baseline.
  - Beginning in 2005, disbursements of budget support grants fall short of projections by 25 percent.
  - Shortfall is financed with additional borrowing throughout the projection period totaling US$628 million.
- Outcomes:
  - By 2010, projected NPV of debt-to-exports ratio is 96 percent, only marginally higher than the baseline (94 percent).
  - By the end of the projection period, projected debt-to-exports ratio is 62 percent, or 7 percentage points higher than in the baseline.

### Topping-up assessment
- IMF and IDA staffs view: there is not a case for Zambia to be granted topping up assistance at the completion point.
- Context:
  - Enhanced HIPC Initiative allows additional debt relief at completion point if deterioration in debt sustainability is primarily attributable to a fundamental change in economic circumstances due to exogenous factors.
  - The NPV of Zambia’s debt-to-exports ratio of 174 percent at end-2003, after full delivery of HIPC Initiative assistance and additional bilateral debt relief, is 24 percentage points higher than the HIPC Initiative debt sustainability threshold of 150 percent and 13 percentage points higher than projected at the decision point.
  - Deterioration in indicators primarily due to exogenous factors: changes in discount and exchange rate parameters between decision and completion points and shortfall in export receipts during 2001-03 owing mainly to weak world market prices for copper.
- Staffs’ judgment:
  - Developments do not reflect a fundamental change in Zambia’s economic circumstances because the debt-to-exports ratio fell sharply in 2004 (by 35 percentage points) and is projected to decline steadily thereafter due to export recovery and increased share of grants in external financing.
  - Resilience of debt-to-exports ratio projections to severe shocks supports the view that topping up is not warranted.

### Debt burden indicators supporting no topping-up
- Projected debt service-to-exports ratio: well below 10 percent after 2004, both in the baseline and in all sensitivity scenarios for 2004-13.
- Debt-service-to-fiscal revenues ratio remains below 10 percent for the entire projection period.
- NPV of debt-to-fiscal revenues ratio remains below the HIPC Initiative fiscal threshold of 250 percent for the projection period.

### Public debt management: risks and reform priorities
- Key risks remaining after completion point:
  - Overall public debt risks to government budgets and the economy.
  - Foreign currency exposure typical of a HIPC country with large external debt.
  - Significant rollover and interest rate exposure from accumulation of short-term domestic borrowing.
  - Low capacity in debt management.
- Actions undertaken:
  - Zambia participated in the Joint IMF/World Bank Debt Reform and Capacity Building Program.
  - An assessment identifying main public debt management and government debt market challenges was undertaken in May 2004.
  - Authorities prepared a public debt management reform program to be implemented over the next 3-5 years with support from IDA and cooperating partners.
- Main challenges and recommended actions (summary of Box 4):
  - Establish institutional framework and capacity to maintain an updated debt database and strengthen back-office functions (consolidated database under way).
  - Strengthen Investment and Debt Management Department’s (IDM) capacity for basic risk analysis and debt management strategy formulation to enable MoFNP to play a more active role.
  - Address contingent liabilities, on-lending, and sub-national debt; set up a general policy for guarantees and include these liabilities in the consolidated database.
  - Merge laws governing public borrowing into a comprehensive new law centralizing borrowing authority with the Minister of Finance and National Planning and specifying accountability to the National Assembly and public.
  - Improve coordination and information exchange between IDM and Bank of Zambia (BoZ); MoFNP should play a more active role in domestic debt policy and management to separate monetary policy and debt management.
  - Formulate a comprehensive domestic debt management strategy addressing refinancing, interest rate risk, and promoting domestic debt market development.
  - Develop the domestic debt market: short-term measures include activating interbank and customer repo markets, introducing market making obligations, and permitting OTC transactions; medium- and long-term measures include ensuring competition in the financial sector, encouraging NBFIs’ intermediation, consolidating NBFI regulators, and reforming clearing, settlement and custody systems.

### Conclusions and recommendation
- Staffs’ view: Zambia’s performance relative to conditions for reaching the completion point under the enhanced HIPC Initiative has been satisfactory.
  - Full PRSP prepared and implemented satisfactorily for at least one full year.
  - Satisfactory track record under a PRGF-supported program re-established.
  - Most key structural reforms and social measures implemented.
  - Adequate progress in implementing completion point triggers.
- Debt sustainability view:
  - Zambia’s debt-to-export profile remains robust under several sensitivity scenarios owing to debt relief provided at completion point, additional bilateral assistance, and expectation of prudent macroeconomic policies and structural reforms.
  - Authorities need to improve debt management and continue borrowing on concessional terms.
  - NPV of debt-to-exports ratio under the baseline and sensitivity scenarios remains below the HIPC threshold of 150 percent for the entire projection period.
  - In staffs’ view, Zambia is not a candidate for topping up of debt relief at completion point under the enhanced HIPC Initiative.
- Recommendation:
  - IMF and IDA staffs recommend that the Executive Directors determine that Zambia has reached the completion point under the enhanced HIPC Initiative.

*Source: IMF/IDA staff assessment and projections contained in the referenced chapter.*

### 70.      Executive Directors are asked to provide guidance on the following questions:

### _cr05137 - 70.      Executive Directors are asked to provide guidance on the following questions:

### Executive Directors' questions
- Do Directors agree that Zambia has met the conditions for reaching the completion point under the enhanced HIPC Initiative framework, as established at the time of the decision point?  
- Do Directors agree that sufficient assurances have been given by Zambia’s other creditors to commit enhanced HIPC Initiative resources to Zambia, as approved at the decision point, on an irrevocable basis?

### Selected economic and financial indicators, 2000-04 (Table 1)
- Real GDP (annual percent change): 2000: 3.6; 2001: 4.9; 2002: 3.3; 2003: 5.1; 2004 (Prel.): 5.0
- GDP deflator (annual percent change): 2000: 30.0; 2001: 24.3; 2002: 19.9; 2003: 19.8; 2004: 20.0
- Consumer prices (annual average): 2000: 26.1; 2001: 21.7; 2002: 22.2; 2003: 21.5; 2004: 18.0
- U.S. dollar value of exports of goods and services (billions): 2000: 2.3; 2001: 19.4; 2002: 2.4; 2003: 15.7; 2004: 49.4
- U.S. dollar value of imports of goods and services (billions): 2000: 12.8; 2001: 23.3; 2002: -2.5; 2003: 13.3; 2004: 23.3
- Export volume (goods) (annual percent change): 2000: -5.7; 2001: 26.2; 2002: 11.2; 2003: 1.8; 2004: 5.6
- Copper export volume (annual percent change): 2000: -2.5; 2001: 26.9; 2002: 11.3; 2003: 7.1; 2004: 8.7
- Copper export prices (average, U.S. dollars per pound): 2000: 0.82; 2001: 0.77; 2002: 0.70; 2003: 0.78; 2004: 1.16
- Nominal effective exchange rate (annual average) (percent change): 2000: -16.5; 2001: -7.7; 2002: -19.3; 2003: -14.1; 2004: -2.2
- Real effective exchange rate (annual average) (percent change): 2000: 1.2; 2001: 8.5; 2002: -5.8; 2003: -1.7; 2004: 8.3
- Terms of trade (percent change): 2000: -4.2; 2001: -1.7; 2002: -6.7; 2003: 4.2; 2004: 20.3
- Money and credit (change in percent of beginning-of-year M2): Net foreign assets: 2000: 63.8; 2001: -53.5; 2002: 68.5; 2003: -9.0; 2004: 13.9
- Broad money (percent change): 2000: 74.1; 2001: 10.8; 2002: 31.5; 2003: 23.4; 2004: 30.2
- Central government revenue (excluding grants) (percent of GDP): 2000: 4.7; 2001: 5.2; 2002: 4.8; 2003: 4.6; 2004: 4.8
- Central government overall balance, cash basis (percent of GDP): 2000: -7.0; 2001: -8.1; 2002: -6.3; 2003: -6.6; 2004: -1.7
- Current account balance, excluding grants (percent of GDP): 2000: -19.2; 2001: -20.8; 2002: -17.3; 2003: -16.2; 2004: -11.9
- Current account balance, including grants and debt relief (percent of GDP): 2000: -11.4; 2001: -10.8; 2002: -6.5; 2003: -7.5; 2004: -4.8
- Gross official reserves (end of period, in millions of U.S. dollars): 2000: 114; 2001: 114; 2002: 283; 2003: 194; 2004: 222
- Gross official reserves (in months of imports of goods and services): 2000: 1.0; 2001: 0.9; 2002: 2.2; 2003: 1.3; 2004: 1.2

### HIPC Initiative interim debt relief and selected poverty-reducing spending (Table 2)
- HIPC Initiative interim debt relief (millions of U.S. dollars): 2000: ...; 2001: 266; 2002: 266; 2003: 237; 2004: 156; 2005 (Est./Proj.): 338
- IMF share of interim debt relief (millions of U.S. dollars): 2000: ...; 2001: 150; 2002: 153; 2003: 171; 2004: 0; 2005: 225
- IDA share of interim debt relief (millions of U.S. dollars): 2000: ...; 2001: 192; 2002: 226; 2003: 293; 2004: 4
- HIPC Initiative interim debt relief (percent of GDP): 2000: ...; 2001: 7.3; 2002: 7.1; 2003: 5.5; 2004: 2.9; 2005: 5.9
- Priority poverty-reducing program expenditures (percent of domestic discretionary budget): 2000: ...; 2001: 1.4; 2002: 0.9; 2003: 1.0; 2004: 2.1; 2005: 2.2
- HIPC-financed capital expenditures (percent of domestic discretionary budget): 2000: ...; 2001: 0.6; 2002: 0.5; 2003: 1.0; 2004: 1.2; 2005: 1.3
- Education (percent of domestic discretionary budget): 2000: 23.0; 2001: 20.2; 2002: 20.8; 2003: 18.1; 2004: 20.6; 2005: 24.1
- Memorandum: External debt service due (millions of U.S. dollars) 2000–2005: 277; 419; 422; 462; 470; 475
- GDP (millions of U.S. dollars): 2000: 3,238; 2001: 3,640; 2002: 3,776; 2003: 4,318; 2004: 5,409; 2005 (Proj.): 6,222

### Enhanced HIPC assistance levels, burden-sharing, and creditor participation (Tables 3–4)
- Total HIPC debt relief under baseline scenario (NPV, millions of US dollars, end-December 1999 NPV terms): 2,499 (Total)
- Multilateral share (millions): 1,331
- Bilateral share (millions): 1,145
- Commercial banks share (millions): 23
- Target NPV of debt-to-exports ratio (in percent): 150
- NPV of debt at end-1999 (after hypothetical Naples stock operation) (millions): 3,991
- Three-year export average (1997-99) (millions): 994
- NPV of debt-to-export ratio (percent) (three-year average basis): 401
- Paris Club creditors (total NPV in Table 3 memo): 1,739; Paris Club creditors reduction factor (percent): 87.5
- Table 4: Status of creditor participation — selected creditor commitments and modalities (summarized):
  - IDA/IBRD/IFC: Debt relief US$493.0 million; 19.7 percent of total assistance; Reply: Yes; Deliver: IDA assistance delivered equal to 84.2% of IDA debt service until 2003 and on average 64% thereafter; Total debt relief to be provided over 20 years, ending 2020; IFC provided full share in interim period.
  - AfDB Group: US$146.1 million; 5.8 percent; Yes; Interim assistance equal to 76.8% debt service reduction until October 2003 when 40% of total NPV limit reached; remaining assistance at completion point equal to an 80% debt service reduction until 2014.
  - IMF: US$602.0 million; 24.1 percent; Yes; IMF provided interim assistance (75% of total) until end-December 2003 when interim relief limit was met; remaining relief through grants from the PRGF/HIPC Trust to an Umbrella Account until 2007.
  - EU: US$57.7 million; 2.3 percent; Yes; Debt-service relief on selected loans during interim period, supplemented with grants to pay off loans at completion point.
  - BADEA: US$11.4 million; 0.5 percent; Yes; Agreed in principle; must agree on a specific modality.
  - IFAD: US$17.3 million; 0.7 percent; Yes; Assistance delivered at completion point by reducing debt service payments on eligible debt by up to 100% until NPV target reached.
  - OPEC Fund: US$3.6 million; 0.1 percent; Yes; Portion (US$2.4 million) via concessional loan, remaining (US$1.2 million) delivered at completion point.
  - Total multilateral: US$1,331.1 million; 53.3 percent; 52.7 percent delivered.
  - Paris Club creditors (aggregate): US$1,089.0 million; 43.6 percent; 43.6 percent delivered (Cologne flow provided during interim period; stock-of-debt operation under Cologne terms expected at completion point).
  - Non-Paris Club creditors: US$56.0 million; 2.2 percent; 40.4 percent delivered.
  - Selected bilateral statuses: Bulgaria: No (being contacted); China: Partial (some obligations written off without reconciliation at decision point); Czech Republic: Partial (fully repaid via debt buyback at 11 percent of face value); India: Yes (100% of bilateral debt waived, along with 50% of commercial debt); others vary as listed.
  - Commercial creditors: US$22.9 million; 0.9 percent; No (being contacted by Zambia).
  - Total bilateral and commercial: US$1,167.8 million; 46.7 percent; 44.0 percent delivered.
  - Total assistance: US$2,499.2 million; 100.0 percent; 96.7 percent delivered.

### Delivery of IDA assistance under enhanced HIPC (Table 5)
- IDA debt service before HIPC relief (select years, in millions of U.S. dollars):
  - Principal & Interest totals by year (listed sequentially): 2000: 17.3; 2001: 22.4; 2002: 25.8; 2003: 30.6; 2004: 41.5; 2005: 49.0; 2006: 54.3; 2007: 58.0; 2008: 60.0; 2009: 63.6; 2010: 66.4; 2011: 74.8; 2012: 77.8; 2013: 82.6; 2014: 85.4; 2015: 90.7; 2016: 93.4; 2017: 95.2; 2018: 96.9; 2019: 100.2; 2020: 102.7
- IDA debt service after HIPC relief (millions): 2000: 17.3; 2001: 3.5; 2002: 4.1; 2003: 4.8; 2004: 12.8; 2005: 15.1; 2006: 16.4; 2007: 18.0; 2008: 20.0; 2009: 22.1; 2010: 25.1; 2011: 29.3; 2012: 30.0; 2013: 31.2; 2014: 31.9; 2015: 33.6; 2016: 34.2; 2017: 35.4; 2018: 37.3; 2019: 39.2; 2020: 42.1
- IDA assistance (annual delivery, millions): 2001: 18.9; 2002: 21.7; 2003: 25.8; 2004: 28.7; 2005: 33.9; 2006: 37.9; 2007: 40.0; 2008: 39.9; 2009: 41.5; 2010: 41.3; 2011: 45.5; 2012: 47.8; 2013: 51.4; 2014: 53.6; 2015: 57.1; 2016: 59.1; 2017: 59.8; 2018: 59.6; 2019: 61.0; 2020: 60.6
- IDA debt relief as percent of IDA debt service due (percent): 2000: 0.0; 2001: 84.2; 2002: 84.2; 2003: 84.2; 2004: 69.2; 2005: 69.2; 2006: 69.9; 2007: 68.9; 2008: 66.6; 2009: 65.3; 2010: 62.2; 2011: 60.8; 2012: 61.4; 2013: 62.2; 2014: 62.7; 2015: 62.9; 2016: 63.3; 2017: 62.8; 2018: 61.5; 2019: 60.9; 2020: 59.0
- Interim assistance (percent of total): 97.6; Interim relief as percent of total: 20 (memorandum)

### Delivery of IMF assistance under enhanced HIPC (Table 6)
- Total IMF assistance under the HIPC Initiative: SDR 468.8 million (calculated on data available at decision point, excluding interest earned on member's account and on committed but undisbursed amounts as described in footnote 4).
- Total obligations falling due to the IMF (SDR, selected years): 2001: 172.7; 2002: 171.6; 2003: 172.8; 2004: 173.6; 2005: 174.3; 2006: 9.0; 2007: 7.9; 2008: 6.9; 2009: 5.9
- IMF assistance—deposits into member's account: Interim assistance: 117.2 (SDR); Completion point assistance: 117.2 (SDR)
- IMF assistance—drawdown schedule (SDR, selected): 2001: 117.5; 2002: 119.8; 2003: 118.1; 2004: 1.6; 2005: 169.3; later smaller amounts listed.
- Net debt service to IMF (SDR, selected years): 2001: 55.2; 2002: 51.8; 2003: 54.6; 2004: 172.0
- Share of debt service to IMF covered by IMF assistance (percent): 2001: 68.0; 2002: 69.8; 2003: 68.4; 2004: 0.9; 2005: 97.2; 2006: 54.1; 2007: 31.8; 2008: 0.0; 2009: 0.0
- Total debt service due (SDR, memorandum based on end-1999 US$/SDR exchange rate): 2000: 264.8; 2001: 596.2; 2002: 585.1; 2003: 591.4; 2004: 615.6; 2005: 613.5; 2006: 292.7; 2007: 335.3; 2008: 363.0; 2009: 367.8
- Share of total debt service covered by IMF assistance (percent): 2001: 10.5; 2002: 11.0; 2003: 10.7; 2004: 0.1; 2005: 14.6; 2006: 17.1; 2007: 8.8; 2008: 0.0; 2009: 0.0

### Paris Club creditors' delivery beyond the HIPC Initiative (Table 7)
- Table summarizes Paris Club creditor practices on provision of relief beyond HIPC under bilateral initiatives. Selected entries:
  - Australia: HIPCs; ODA 100% pre- and post-cutoff; Non-ODA 100% pre- and post-cutoff; timing details to be finalized.
  - Belgium: HIPCs; ODA 100% pre-cutoff and 100% pre-cutoff stock; provision: 100% flow; Stock (case-by-case).
  - Canada: HIPCs; 100% (ODA) cancellation and completion point stock cancellation; provided moratorium of debt service as of January 2001 for eligible HIPCs; completion point stock cancellation granted for several HIPCs as of July 2004.
  - Denmark: HIPCs; 100% cancellation of ODA loans and non-ODA credits contracted and disbursed before September 27, 1999.
  - France, Germany, Italy, Japan, Netherlands, United Kingdom, United States: varied combinations of 100% cancellation for ODA and non-ODA pre-cutoff and other flow/stock modalities, with country-specific notes in the table.
- Notes include country-specific modalities, case-by-case treatments, and references to Cologne/decision-point practices.

### Discount rate and exchange rate assumptions (Table 8)
- Discount rates used (average CIRRs or SDR proxy) at Decision Point and Completion Point (percent per annum); examples:
  - Austrian Schilling: Decision Point 5.47; Completion Point 4.63
  - Canadian Dollar: Decision Point 6.67; Completion Point 5.18
  - Japanese Yen: Decision Point 1.98; Completion Point 1.70
  - United States Dollar: Decision Point 7.04; Completion Point 4.47
  - Special Drawing Rights: Decision Point 5.59; Completion Point 4.20
- Exchange rate examples (currency per U.S. dollar):
  - Euro (ECU/Euro): Decision Point 1.00; Completion Point 0.79
  - Japanese Yen: Decision Point 102.20; Completion Point 107.11
  - United States Dollar: Decision Point 1.00; Completion Point 1.00
- Note: For former Soviet Union debt, Russian rouble conversion at 0.6 roubles per USD as agreed between Russia and the Paris Club.

### Nominal and NPV of external debt at completion point, end-2003 (Table 9)
- Total nominal external debt (end-2003): 6,999.6 (millions of US dollars)
- NPV of debt (end-2003): 5,726.7 (millions)
- NPV of debt after enhanced HIPC: 2,078.1 (millions)
- NPV of debt after additional bilateral assistance: 1,958.2 (millions)
- Multilateral nominal debt: 3,924.7; multilateral NPV: 2,581.6; multilateral NPV after enhanced HIPC: 1,619.5; after additional bilateral assistance: 1,619.5
- IMF nominal debt: 858.7; IMF NPV: 761.4; IMF NPV after enhanced HIPC: 518.1
- Paris Club bilateral nominal: 2,752.3; Paris Club NPV: 2,832.3; Paris Club NPV after enhanced HIPC: 292.6; after additional bilateral assistance: 172.7 (noted as expected to be delivered collectively under the enhanced HIPC Initiative)
- Non-Paris Club bilateral nominal: 247.9; NPV: 239.1; NPV after enhanced HIPC: 123.0; after additional bilateral assistance: 123.0
- Commercial creditors nominal: 74.7; commercial NPV: 73.7; commercial NPV after enhanced HIPC: 43.0

### Comparison of NPV of external public debt: decision point vs. completion point (Table 10)
- NPV of debt using end-1999 parameters:
  - Decision Point DSA (projection): 2,232 (millions)
  - Completion Point DSA after enhanced debt relief: 1,696 (millions)
  - Completion Point DSA after additional bilateral relief: 1,588 (millions)
- NPV of debt using end-2003 parameters:
  - Completion point DSA after enhanced debt relief: 2,078 (millions)
  - Completion point DSA after additional bilateral relief: 1,958 (millions)
- NPV of debt-to-exports ratio (percent) using end-2003 parameters:
  - Completion point: 432 (Decision point basis shown as 161 under end-1999 parameters); after enhanced relief: 184; after additional bilateral relief: 174
- Exports of goods and services (millions): Decision point: 1,386; Completion point: 1,127

### Comparison of macroeconomic assumptions at decision point and outturns 1999–2004 (Table 11)
- Decision point assumptions (selected):
  - Real GDP growth (percent): 1999: 2.4; 2000: 4.0; 2001: 5.0; 2002: 5.0; 2003: 5.0; 2004: 5.0
  - GDP deflator (percent): 1999: 21.7; 2000: 25.9; 2001: 10.5; 2002: 9.2; 2003: 1.0; 2004: 1.0
  - GDP in Kwachas (bn): 1999: 7,522; 2000: 9,853; 2001: 11,431; 2002: 13,108; 2003: 13,902; 2004: 14,744
  - GDP in US$ (mn): 1999: 3,150; 2000: 3,389; 2001: 3,445; 2002: 3,652; 2003: 4,059; 2004: 4,305
  - Exports of goods and services (three-year average, millions): Decision point: 994
- Outturns (selected):
  - Real GDP growth (percent): 2000: 3.6; 2001: 4.9; 2002: 3.3; 2003: 5.1; 2004: 5.0
  - GDP deflator (percent): 2000: 30.0; 2001: 24.3; 2002: 19.9; 2003: 19.8; 2004: 20.0
  - GDP in Kwachas (bn) outturns: 2000: 10,075; 2001: 13,133; 2002: 16,260; 2003: 20,481; 2004: 25,814
  - GDP in US$ (mn) outturns: 2000: 3,239; 2001: 3,640; 2002: 3,776; 2003: 4,318; 2004: 5,409
  - Exports of goods and services (outturns, millions): 2000: 842; 2001: 861; 2002: 1,028; 2003: 1,052; 2004: 1,217
  - Copper export receipts (outturns, millions): 2000: 424; 2001: 506; 2002: 509; 2003: 606; 2004: 982
  - Copper price (US$ per pound) outturns: 2000: 0.82; 2001: 0.77; 2002: 0.70; 2003: 0.78; 2004: 1.16
  - Gross official reserves (including gold) outturns (millions): 2000: 114; 2001: 114; 2002: 283; 2003: 197; 2004: 222
  - Gross official reserves (in months of imports) outturns: 2000: 1.0; 2001: 0.9; 2002: 2.2; 2003: 1.3; 2004: 1.2

### Macroeconomic projections and balance of payments 2003–2023 (select projections)
- Real GDP (percentage change) projections: 2003: 5.1%; 2004: 5.0%; 2005–2023: 5.0% each year (listed uniformly)
- Real GDP per capita (percentage change): 2003: 2.7%; 2004: 2.5%; 2005–2017: 2.5%; 2018: 2.6%; 2019: 2.6%; 2020: 2.6%; 2021: 2.7%; 2022: 2.8%; 2023: 3.0%
- GDP deflator (percent): 2003: 19.8%; 2004: 20.0%; 2005: 15.2%; 2006: 9.3%; 2007: 6.0%; thereafter 5.0 percent annual assumed for many years
- GDP level (millions of US$): 2003: 4,318; 2004: 5,409; 2005: 6,222; 2006: 6,517; 2007: 6,921; 2008: 7,500; 2009: 8,110; 2010: 8,761; 2011: 9,443; 2012: 10,178; 2013: 10,970; 2018: 15,959; 2023: 23,216
- Government revenues, excluding grants (millions of U.S. dollars): 2003: 776; 2004: 993; 2005: 1,144; 2006: 1,205; 2007: 1,283; 2008: 1,402; 2009: 1,526; 2010: 1,662; 2011: 1,810; 2012: 1,972; 2013: 2,147; 2018: 3,224; 2023: 4,690
- Government revenues, excluding grants (percent of GDP): 2003: 18.0%; 2004: 18.4%; 2005 onward around 18.4%–20.0% with long-run 20.0% in some projections
- Current account, excluding official transfers (millions of U.S. dollars): 2003: -700; 2004: -642; 2005: -642; 2006: -733; 2007: -788; 2008: -819; 2009: -799; 2010: -838; 2011: -828; 2012: -854; 2013: -874; 2018: -1,087; 2023: -1,387
- Current account, excluding official transfers (percent of GDP): 2003: -16.2; 2004: -11.9; 2005: -10.3; 2006: -11.2; 2007: -11.3; 2008: -10.8; 2009: -9.8; 2010: -9.5; 2011: -8.7; 2012: -8.3; 2013: -7.9; 2018: -6.7; 2023: -5.9

*Sources: Zambian authorities; and IMF staff estimates, projections, and referenced tables in the document.*

### 1. Exports of goods and services

### _cr05137 - 1. Exports of goods and services

### Current account and trade flows
- Exports of goods and services (series):
  - 1,246; 1,850; 2,009; 2,087; 2,120; 2,149; 2,271; 2,402; 2,541; 2,690; 2,850; 3,810; 5,092; 2,297; 3,977
- Imports of goods and services (series):
  - -1,796; -2,213; -2,275; -2,484; -2,495; -2,645; -2,803; -2,971; -3,150; -3,339; -3,539; -4,736; -6,338; -2,791; -4,945
- Net factor income (excluding interest payments) (series):
  - -17; -182; -326; -253; -309; -194; -218; -179; -186; -186; -190; -201; -214; -222; -203
- Interest payments (series):
  - -131; -121; -110; -101; -95; -89; -84; -80; -76; -72; -68; -49; -35; -90; -48
- Net current transfers (series):
  - -3; 25; -31; -36; -39; -41; -42; -44; -46; -48; -51; -75; -109; -35; -79
- Official transfers (grants and other) (series):
  - 377; 382; 465; 536; 547; 561; 582; 618; 641; 668; 685; 787; 919; 568; 804
- II. Current account, including official transfers (series):
  - -323; -260; -268; -252; -272; -238; -255; -210; -213; -206; -227; -353; -539; -240; -379
- Current account (in percent of GDP) (series):
  - -7.5; -4.8; -4.3; -3.9; -3.9; -3.1; -3.1; -2.4; -2.2; -2.0; -2.1; -2.2; -2.3; -3.0%; -2.2%

### Capital flows and financing
- III. Long-term Capital Inflows (series):
  - 79; 33; 131; 70; 97; 123; 114; 138; 147; 153; 160; 224; 268; 116; 220
- 1. Net foreign direct investment (series):
  - 172; 344; 250; 158; 187; 210; 220; 230; 240; 250; 260; 310; 360; 235; 315
- 2. Net long-term borrowing (series):
  - -141; -221; -136; -77; -80; -77; -96; -82; -83; -87; -90; -76; -82; -103; -85
  - a. Disbursements (series): 101; 110; 89; 90; 93; 97; 70; 77; 84; 88; 90; 99; 108; 89; 100
  - b. Repayments due (series): -242; -331; -225; -167; -174; -174; -166; -159; -168; -175; -180; -175; -190; -192; -185
- 3. Other net L-T flows (change in net foreign assets) (series):
  - 48; -90; 17; -10; -10; -10; -10; -10; -10; -10; -10; -10; -15; -10
- Errors and omissions and net short-term capital (series):
  - -2; 95; 15; 0; 0; 0; 0; 0 0 0 0; 0; 11; 0
- IV. Overall balance (series):
  - -321; -287; -325; -368; -317; -271; -295; -255; -249; -249; -164; -196; -310; -278; -223

- VI. Financing (series):
  - 321; 287; 325; 251; 207; 103; 112; 121; 102; 91; 129; 118; -47; 173; 69
  - 1. Change in net international reserves of Bank of Zambia (- incr) (series):
    - -164; -41; -266; -48; -66; -161; -165; -176; -203; -229; -198; -175; -270; -155; -213
  - 2. IMF (net) (series):
    - -244; -10; -235; 17; -23; -68; -67; -113; -110; -91; -63; 0; 0; -76; -9
  - 3. Debt relief (series):
    - 391; 264; 480; 197; 191; 184; 188; 186; 186; 189; 193; 146; 62; 226; 134
  - 5. BOP support grants (series):
    - 45; 44; 89; 66; 44; 46; 54; 76; 84; 96; 98; 108; 118; 70; 109
  - 6. BOP support loans (as presented):
    - 10  21 44 353833  3535353536 39 43 35 40

- VII. Remaining finance gap (- is surplus) (series):
  - 0; 0; 0; 117; 109; 169; 183; 134; 147; 158; 34; 78; 357; 105; 153

### Overall balance, reserves, and indicators
- Overall balance (repeated): -321; -287; -325; -368; -317; -271; -295; -255; -249; -249; -164; -196; -310; -278; -223
- Memorandum Items — Gross international reserves (series):
  - 197; 222; 246; 310; 353; 446; 543; 607; 700; 839; 973; 1,776; 3,010; 524; 1,953
- Gross official reserves (in months of imports) (series):
  - 1.3; 1.2; 1.3; 1.5; 1.7; 2.0; 2.3; 2.5; 2.7; 3.0; 3.3; 4.5; 5.7; 2.2; 4.6

### Debt Sustainability Analysis (Net Present Value of External Debt, selected series and scenarios)
- Table header: Table 13. Zambia: Net Present Value of External Debt, 2003 - 2023 (In millions of U.S. dollars; unless otherwise indicated)
- Time coverage and labels: 2003 through 2023; Actuals, Projections, Averages; DSA - Baseline Scenario
- I. After traditional debt-relief mechanisms
  - 1. NPV of total debt (2+6) 2/ (series):
    - 4871.6; 4847.3; 4663.5; 4700.9; 4700.3; 4667.2; 4618.0; 4520.0; 4413.7; 4316.8; 4239.9; 4157.0; 4110.0; 4050.7; 3983.2; 3903.6; 3806.2; 3703.4; 3595.4; 3475.2; 3437.6; 4596.3; 3822.2
  - 2. NPV of outstanding debt (3+4) (series):
    - 4871.6; 4601.4; 4323.0; 4268.4; 4182.1; 4073.4; 3957.7; 3837.5; 3712.0; 3600.4; 3510.8; 3414.2; 3305.7; 3177.8; 3034.9; 2875.8; 2698.0; 2513.3; 2321.9; 2116.9; 1993.0; 4085.3; 2745.1
  - 3. Official bilateral and commercial (series highlights):
    - 2247.3; 2215.0; 2185.9; 2156.0; 2123.2; 2093.5; 2059.1; 2021.7; 1979.4; 1931.1; 1875.5; 1817.0; 1752.9; 1674.0; 1584.1; 1482.3; 1367.4; 1250.3; 1130.7; 998.7; 949.0; 2080.7; 1400.6
  - 4. Multilateral (series highlights):
    - 2624.2; 2386.3; 2137.1; 2112.5; 2059.0; 1979.9; 1898.6; 1815.8; 1732.7; 1669.3; 1635.3; 1597.2; 1552.7; 1503.8; 1450.8; 1393.6; 1330.7; 1263.0; 1191.1; 1118.2; 1044.0; 2004.6; 1344.5
  - 5. Nominal stock of total debt (incl. new loans) (series highlights):
    - 6151.9; 6187.3; 6010.6; 6054.9; 6056.7; 6019.6; 5952.1; 5839.9; 5724.6; 5623.2; 5546.5; 5463.6; 5418.8; 5362.0; 5297.4; 5220.7; 5126.3; 5026.7; 4922.5; 4806.7; 4775.6; 5924.3; 5142.1
  - Multilateral nominal stock (series):
    - 3924.7; 3611.8; 3294.3; 3208.8; 3093.5; 2952.8; 2811.7; 2671.2; 2532.6; 2416.2; 2331.0; 2242.3; 2148.3; 2050.9; 1950.6; 1847.7; 1740.6; 1630.6; 1518.3; 1407.2; 1297.0; 2986.2; 1783.3
  - Bilateral and Commercial nominal stock (series):
    - 2227.2; 2197.4; 2171.2; 2143.9; 2113.9; 2087.5; 2056.1; 2022.0; 1982.5; 1937.0; 1885.9; 1829.7; 1767.6; 1690.3; 1601.7; 1500.5; 1385.8; 1268.3; 1147.9; 1014.3; 964.3; 2075.0; 1417.0
  - New Debt (series highlights):
    - 378.2; 545.1; 702.1; 849.3; 979.3; 1084.2; 1146.7; 1209.5; 1270.0; 1329.6; 1391.6; 1502.9; 1620.9; 1745.1; 1872.5; 1999.9; 2127.9; 2256.3; 2385.2; 2514.4; 989.6; 2002.8

- II. After conditional delivery of enhanced HIPC assistance (selected series)
  - 1. NPV of total debt (2+6) 2/ (series highlights):
    - 4979.4; 4986.1; 2092.8; 2157.7; 2185.9; 2173.2; 2169.4; 2134.9; 2103.5; 2093.5; 2117.2; 2140.2; 2206.7; 2279.8; 2358.5; 2439.2; 2518.9; 2597.6; 2613.0; 2626.1; 2638.3; 2654.0; 2441.8
  - 2. NPV of outstanding debt (3+4) (series highlights):
    - 4979.4; 4740.1; 1752.4; 1725.1; 1667.7; 1579.4; 1509.2; 1452.4; 1401.9; 1377.2; 1388.1; 1397.4; 1402.4; 1406.9; 1410.2; 1411.4; 1410.8; 1407.6; 1339.5; 1267.8; 1193.7; 2143.0; 1364.8

- III. After unconditional delivery of enhanced HIPC assistance (selected series)
  - 1. NPV of total debt (2+6) 2/ (series highlights):
    - 2078.1; 2052.2; 2092.8; 2157.7; 2185.9; 2173.2; 2169.4; 2134.9; 2103.5; 2093.5; 2117.2; 2140.2; 2206.7; 2279.8; 2358.5; 2439.2; 2518.9; 2597.6; 2613.0; 2626.1; 2638.3; 2123.5; 2441.8
  - 2. NPV of outstanding debt (3+4) (series highlights):
    - 2078.1; 1806.3; 1752.4; 1725.1; 1667.7; 1579.4; 1509.2; 1452.4; 1401.9; 1377.2; 1388.1; 1397.4; 1402.4; 1406.9; 1410.2; 1411.4; 1410.8; 1407.6; 1339.5; 1267.8; 1193.7; 1612.5; 1364.8

- IV. After bilateral debt relief beyond HIPC assistance (selected series)
  - 1. NPV of total debt (2+6) 2/ (series highlights):
    - 4483.4; 4496.0; 1998.9; 2063.5; 2091.6; 2078.7; 2074.8; 2040.2; 2008.7; 1998.6; 2022.2; 2045.1; 2111.6; 2184.5; 2263.2; 2343.8; 2423.5; 2502.1; 2518.0; 2532.1; 2545.5; 2486.9; 2346.9
  - 2. NPV of outstanding debt (3+4) (series highlights):
    - 4483.4; 4250.1; 1658.4; 1631.0; 1573.4; 1484.9; 1414.5; 1357.6; 1307.0; 1282.2; 1293.1; 1302.3; 1307.2; 1311.7; 1314.9; 1316.1; 1315.4; 1312.1; 1244.5; 1173.7; 1100.8; 1976.0; 1269.9
  - 3. Official bilateral and commercial (series highlights):
    - 1984.3; 1937.4; 183.3; 148.3; 116.2; 87.3; 73.4; 71.8; 70.2; 68.5; 66.8; 65.1; 64.6; 64.1; 63.6; 63.0; 62.5; 62.4; 62.3; 62.3; 62.1; 437.0; 63.2

*Sources:  Zambian authorities; and staff estimates and projections.*

### 4. Multilateral

### 4. Multilateral

### External debt service after full implementation of debt-relief mechanisms (2004-2023)
- Total debt service (incl. new debt):
  - 2004: 448.6; 2005: 447.0; 2006: 213.3; 2007: 244.3; 2008: 264.5; 2009: 268.0; 2010: 318.1; 2011: 326.1; 2012: 314.1; 2013: 291.3; 2014: 295.3; 2015: 257.0; 2016: 268.4; 2017: 275.2; 2018: 285.7; 2019: 301.2; 2020: 303.6; 2021: 305.7; 2022: 314.5; 2023: 227.9.
- After traditional debt-relief mechanisms 1/:
  - Total: 2004: 446.3; 2005: 443.6; 2006: 208.8; 2007: 238.7; 2008: 258.0; 2009: 260.7; 2010: 260.6; 2011: 261.1; 2012: 242.1; 2013: 215.6; 2014: 218.9; 2015: 226.8; 2016: 241.5; 2017: 251.2; 2018: 261.2; 2019: 273.2; 2020: 272.5; 2021: 271.3; 2022: 276.8; 2023: 186.8.
- Composition after traditional relief (selected multilateral creditors):
  - Multilateral total: 2004: 346.7; 2005: 348.3; 2006: 113.5; 2007: 141.5; 2008: 165.0; 2009: 164.0; 2010: 162.1; 2011: 158.9; 2012: 135.7; 2013: 103.6; 2014: 106.3; 2015: 111.1; 2016: 113.6; 2017: 115.7; 2018: 117.6; 2019: 120.9; 2020: 123.0; 2021: 124.4; 2022: 122.5; 2023: 120.6.
  - IDA: 2004: 41.5; 2005: 49.0; 2006: 54.3; 2007: 58.0; 2008: 60.0; 2009: 63.6; 2010: 66.4; 2011: 74.8; 2012: 77.8; 2013: 82.6; 2014: 85.4; 2015: 90.7; 2016: 93.4; 2017: 95.2; 2018: 96.9; 2019: 100.2; 2020: 102.7; 2021: 105.1; 2022: 104.5; 2023: 104.1.
  - IMF: 2004: 256.2; 2005: 256.5; 2006: 17.3; 2007: 41.7; 2008: 72.0; 2009: 70.1; 2010: 68.3; 2011: 58.3; 2012: 32.1; 2013–2023: 0.0 (except memorandum entries).
- Official bilateral after traditional relief:
  - Total official bilateral: 2004: 99.6; 2005: 95.3; 2006: 95.3; 2007: 97.2; 2008: 93.0; 2009: 96.7; 2010: 98.5; 2011: 102.2; 2012: 106.5; 2013: 112.0; 2014: 112.6; 2015: 115.7; 2016: 127.9; 2017: 135.4; 2018: 143.6; 2019: 152.3; 2020: 149.5; 2021: 146.9; 2022: 154.3; 2023: 66.2.
- After enhanced HIPC assistance:
  - Total debt service (incl. new debt): 2004: 429.9; 2005: 118.6; 2006: 86.3; 2007: 116.7; 2008: 147.7; 2009: 129.5; 2010: 166.2; 2011: 167.9; 2012: 149.4; 2013: 117.7; 2014: 120.5; 2015: 79.0; 2016: 76.5; 2017: 75.0; 2018: 77.6; 2019: 83.2; 2020: 88.8; 2021: 156.6; 2022: 160.9; 2023: 163.7.
  - After enhanced HIPC assistance (multilateral): 2004: 290.3; 2005: 35.5; 2006: 39.1; 2007: 73.0; 2008: 107.7; 2009: 105.0; 2010: 104.3; 2011: 98.5; 2012: 73.1; 2013: 37.8; 2014: 39.9; 2015: 45.9; 2016: 46.7; 2017: 48.1; 2018: 50.2; 2019: 52.2; 2020: 55.3; 2021: 119.4; 2022: 119.8; 2023: 119.0.
- Debt service of new debt (memorandum):
  - 2004: 2.2; 2005: 3.4; 2006: 4.5; 2007: 5.5; 2008: 6.5; 2009: 7.3; 2010: 57.5; 2011: 65.0; 2012: 71.9; 2013: 75.7; 2014: 76.3; 2015: 30.2; 2016: 26.9; 2017: 24.1; 2018: 24.5; 2019: 28.1; 2020: 31.1; 2021: 34.3; 2022: 37.7; 2023: 41.1.

### External debt indicators (2003-2023) — after traditional and enhanced relief scenarios
- After traditional debt relief mechanisms 2/ (NPV of debt-to-GDP ratio):
  - 2003: 112.8; 2004: 89.6; 2005: 75.0; 2006: 71.9; 2007: 67.5; 2008: 61.6; 2009: 56.4; 2010: 51.1; 2011: 46.3; 2012: 42.0; 2013: 38.3; 2014: 34.8; 2015: 31.9; 2016: 29.2; 2017: 26.6; 2018: 24.2; 2019: 21.9; 2020: 19.8; 2021: 17.8; 2022: 16.0; 2023: 14.7.
- After traditional relief (NPV of debt-to-exports ratio) 3/4/:
  - 2003: 432.2; 2004: 348.2; 2005: 274.0; 2006: 237.2; 2007: 226.9; 2008: 220.3; 2009: 211.8; 2010: 198.8; 2011: 183.6; 2012: 169.7; 2013: 157.4; 2014: 145.7; 2015: 135.9; 2016: 126.4; 2017: 117.3; 2018: 108.5; 2019: 99.8; 2020: 91.6; 2021: 83.9; 2022: 76.6; 2023: 71.5.
- After traditional relief (NPV of debt-to-revenue ratio) 5/:
  - 2003: 627.9; 2004: 488.0; 2005: 407.6; 2006: 392.9; 2007: 369.0; 2008: 330.1; 2009: 302.0; 2010: 270.9; 2011: 242.9; 2012: 218.1; 2013: 196.7; 2014: 177.1; 2015: 160.8; 2016: 146.0; 2017: 133.2; 2018: 121.1; 2019: 109.5; 2020: 98.9; 2021: 89.1; 2022: 79.9; 2023: 73.3.
- After conditional delivery of enhanced HIPC assistance (selected indicators):
  - NPV of debt-to-GDP ratio: 2004: 92.2; 2005: 33.6; 2006: 33.0; 2007: 31.4; 2008: 28.7; 2009: 26.5; 2010: 24.1; 2011: 22.1; 2012: 20.4; 2013: 19.1; 2014: 17.9; 2015: 17.1; 2016: 16.4; 2017: 15.8; 2018: 15.1; 2019: 14.5; 2020: 13.9; 2021: 12.9; 2022: 12.1; 2023: 11.3.
  - Debt service-to-exports ratio: 2004: 23.2; 2005: 5.9; 2006: 4.1; 2007: 5.5; 2008: 6.9; 2009: 5.7; 2010: 6.9; 2011: 6.6; 2012: 5.6; 2013: 4.1; 2014: 4.0; 2015: 2.5; 2016: 2.3; 2017: 2.1; 2018: 2.0; 2019: 2.1; 2020: 2.1; 2021: 3.5; 2022: 3.3; 2023: 3.2.
- After unconditional delivery of enhanced HIPC assistance (selected indicators):
  - NPV of debt-to-GDP ratio: 2003: 48.1; 2004: 37.9; 2005: 33.6; 2006: 33.0; 2007: 31.4; 2008: 28.7; 2009: 26.5; 2010: 24.1; 2011: 22.1; 2012: 20.4; 2013: 19.1; 2014: 17.9; 2015: 17.1; 2016: 16.4; 2017: 15.8; 2018: 15.1; 2019: 14.5; 2020: 13.9; 2021: 12.9; 2022: 12.1; 2023: 11.3.
- Memorandum items (selected, in millions of U.S. dollars):
  - NPV of debt after enhanced HIPC assistance: 2003: 4979.4; 2004: 4986.1; 2005: 2092.8; 2006: 2157.7; 2007: 2185.9; 2008: 2173.2; 2009: 2169.4; 2010: 2134.9; 2011: 2103.5; 2012: 2093.5; 2013: 2117.2; 2014: 2140.2; 2015: 2206.7; 2016: 2279.8; 2017: 2358.5; 2018: 2439.2; 2019: 2518.9; 2020: 2597.6; 2021: 2613.0; 2022: 2626.1; 2023: 2638.3.
  - Of which existing debt only: 2003: 4979.4; 2004: 4740.1; 2005: 1752.4; 2006: 1725.1; 2007: 1667.7; 2008: 1579.4; 2009: 1509.2; 2010: 1452.4; 2011: 1401.9; 2012: 1377.2; 2013: 1388.1; 2014: 1397.4; 2015: 1402.4; 2016: 1406.9; 2017: 1410.2; 2018: 1411.4; 2019: 1410.8; 2020: 1407.6; 2021: 1339.5; 2022: 1267.8; 2023: 1193.7.
  - GDP (millions of U.S. dollars): 2003: 4317.9; 2004: 5409.1; 2005: 6221.8; 2006: 6539.2; 2007: 6967.2; 2008: 7575.3; 2009: 8192.2; 2010: 8849.5; 2011: 9538.4; 2012: 10280.9; 2013: 11081.2; 2014: 11943.8; 2015: 12873.5; 2016: 13875.6; 2017: 14955.8; 2018: 16120.0; 2019: 17374.8; 2020: 18727.3; 2021: 20185.1; 2022: 21756.4; 2023: 23450.0.
  - Exports of goods and services (annual, millions of U.S. dollars): 2003: 1246.5; 2004: 1850.0; 2005: 2008.8; 2006: 2086.6; 2007: 2119.6; 2008: 2149.2; 2009: 2271.0; 2010: 2401.6; 2011: 2540.9; 2012: 2689.8; 2013: 2850.5; 2014: 3020.8; 2015: 3201.2; 2016: 3392.4; 2017: 3595.0; 2018: 3809.7; 2019: 4037.3; 2020: 4278.5; 2021: 4534.0; 2022: 4804.8; 2023: 5091.8.
  - Government revenue (millions of U.S. dollars): 2003: 775.8; 2004: 993.3; 2005: 1144.1; 2006: 1196.5; 2007: 1273.8; 2008: 1413.9; 2009: 1529.0; 2010: 1668.3; 2011: 1817.2; 2012: 1979.2; 2013: 2155.5; 2014: 2347.1; 2015: 2555.6; 2016: 2775.1; 2017: 2991.2; 2018: 3224.0; 2019: 3475.0; 2020: 3745.5; 2021: 4037.0; 2022: 4351.3; 2023: 4690.0.

### Sensitivity analysis (2003-2023) — baseline and alternative scenarios
- Baseline scenario (selected ratios and memorandum items):
  - Baseline NPV of debt-to-exports ratio: 2003: 184.3; 2004: 147.4; 2005: 123.0; 2006: 108.9; 2007: 105.5; 2008: 102.6; 2009: 99.5; 2010: 93.9; 2011: 87.5; 2012: 82.3; 2013: 78.6; 2014: 75.0; 2015: 73.0; 2016: 71.1; 2017: 69.4; 2018: 67.8; 2019: 66.0; 2020: 64.3; 2021: 61.0; 2022: 57.9; 2023: 54.8.
  - Baseline debt service-to-exports ratio: 2004: 23.2; 2005: 5.9; 2006: 4.1; 2007: 5.5; 2008: 6.9; 2009: 5.7; 2010: 6.9; 2011: 6.6; 2012: 5.6; 2013: 4.1; 2014: 4.0; 2015: 2.5; 2016: 2.3; 2017: 2.1; 2018: 2.0; 2019: 2.1; 2020: 2.1; 2021: 3.5; 2022: 3.3; 2023: 3.2.
  - Memorandum: NPV of debt (millions of U.S. dollars): 2003: 2,078.1; 2004: 2,052.2; 2005: 2,092.8; 2006: 2,157.7; 2007: 2,185.9; 2008: 2,173.2; 2009: 2,169.4; 2010: 2,134.9; 2011: 2,103.5; 2012: 2,093.5; 2013: 2,117.2; 2014: 2,140.2; 2015: 2,206.7; 2016: 2,279.8; 2017: 2,358.5; 2018: 2,439.2; 2019: 2,518.9; 2020: 2,597.6; 2021: 2,613.0; 2022: 2,626.1; 2023: 2,638.3.
  - Of which new debt (millions of U.S. dollars): 2004: 0.0; 2005: 245.9; 2006: 340.5; 2007: 432.5; 2008: 518.2; 2009: 593.8; 2010: 660.3; 2011: 682.5; 2012: 701.6; 2013: 716.4; 2014: 729.1; 2015: 742.8; 2016: 804.3; 2017: 872.9; 2018: 948.3; 2019: 1,027.7; 2020: 1,108.1; 2021: 1,190.1; 2022: 1,273.5; 2023: 1,358.3.
- Alternative scenario I (20% reduction in copper prices beyond baseline) — selected outcomes:
  - NPV of debt-to-exports ratio: 2005: 128.6; 2006: 118.3; 2007: 119.8; 2008: 118.0; 2009: 115.8; 2010: 110.1; 2011: 102.3; 2012: 96.0; 2013: 91.5; 2014: 87.1; 2015: 84.5; 2016: 82.2; 2017: 80.0; 2018: 77.9; 2019: 75.7; 2020: 73.4; 2021: 69.5; 2022: 65.8; 2023: 62.2.
  - Memorandum: NPV of debt (millions): 2005: 2,092.8; 2006: 2,159.5; 2007: 2,191.7; 2008: 2,185.6; 2009: 2,189.1; 2010: 2,158.9; 2011: 2,128.1; 2012: 2,118.8; 2013: 2,143.1; 2014: 2,166.8; 2015: 2,234.1; 2016: 2,307.9; 2017: 2,387.4; 2018: 2,468.7; 2019: 2,548.7; 2020: 2,627.5; 2021: 2,642.8; 2022: 2,655.8; 2023: 2,667.9.
- Alternative scenario II (lower real GDP growth and lower non-metal export volume growth) — selected outcomes:
  - NPV of debt-to-exports ratio: 2005: 124.2; 2006: 111.7; 2007: 110.5; 2008: 109.6; 2009: 108.3; 2010: 104.0; 2011: 98.3; 2012: 93.9; 2013: 91.0; 2014: 88.1; 2015: 87.0; 2016: 86.1; 2017: 85.4; 2018: 84.6; 2019: 83.8; 2020: 82.9; 2021: 80.1; 2022: 77.4; 2023: 74.9.
  - Memorandum: NPV of debt (millions): 2005: 2,102.8; 2006: 2,188.7; 2007: 2,240.6; 2008: 2,247.6; 2009: 2,257.2; 2010: 2,229.6; 2011: 2,200.7; 2012: 2,193.4; 2013: 2,219.8; 2014: 2,245.7; 2015: 2,315.2; 2016: 2,390.9; 2017: 2,471.5; 2018: 2,553.2; 2019: 2,633.2; 2020: 2,711.7; 2021: 2,726.7; 2022: 2,739.4; 2023: 2,751.2.
- Alternative scenario III (higher borrowing to finance a 25% shortfall in program grants) — selected outcomes:
  - NPV of debt-to-exports ratio: 2005: 123.6; 2006: 109.8; 2007: 106.6; 2008: 104.0; 2009: 101.2; 2010: 95.9; 2011: 89.8; 2012: 85.0; 2013: 81.7; 2014: 78.5; 2015: 76.8; 2016: 75.3; 2017: 74.0; 2018: 72.7; 2019: 71.4; 2020: 70.0; 2021: 67.1; 2022: 64.4; 2023: 61.8.
  - Memorandum: NPV of debt (millions): 2005: 2,103.0; 2006: 2,175.6; 2007: 2,209.4; 2008: 2,202.5; 2009: 2,205.7; 2010: 2,180.8; 2011: 2,160.3; 2012: 2,162.9; 2013: 2,200.5; 2014: 2,239.0; 2015: 2,322.9; 2016: 2,414.7; 2017: 2,514.1; 2018: 2,617.5; 2019: 2,722.4; 2020: 2,828.8; 2021: 2,874.7; 2022: 2,921.3; 2023: 2,970.3.

### HIPC Initiative: status and assistance (selected entries)
- Zambia (decision point reached under enhanced framework):
  - Decision point/completion point — entries show: NPV reduction in percent: 150; Target exports/revenue/multi-World/Banks etc. (table entries for multiple countries and assistance levels are provided in the source).
  - Zambia: Decision point reached under enhanced framework: NPV of debt in NPV terms shown as 2,499 (in table context); multi-column breakdown indicates 1,168 and 1,331, with percent columns 60 and 63; total assistance/committed listed as 3,850 (in table context).
- Table 17 presents detailed country-by-country HIPC status, assistance levels, and NPV allocations across bilateral, multilateral, IMF, World Bank/IDA, and other creditors for multiple countries (Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Senegal, Tanzania, Uganda, Cameroon, Chad, Congo DR, Gambia, Guinea, Guinea-Bissau, Honduras, Malawi, Rwanda, São Tomé and Príncipe, Sierra Leone, Zambia, Côte d'Ivoire, Burundi). Specific numeric entries are in the table.

*Sources: Zambian authorities; and staff estimates and projections. (Tables and notes as provided in the source PDF.)*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr05137.pdf_