Press Release No. 06/56

Press Release 06/56

Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund (IMF), issued the following statement in Lusaka today during his March 15-17 visit to Zambia:

"I am delighted to have had this opportunity to visit Zambia. I have had the privilege of meeting President Mwanawasa, Finance Minister Ng'andu Magande, and other members of the Government's economic team. We held very fruitful discussions. Zambia has pursued a strategy of promoting macroeconomic stability and good public sector management, and encouraging sound growth of the financial and private sectors. We at the IMF have been glad to support these efforts and to help Zambia make progress toward achieving the Millennium Development Goals.

"The IMF has long supported debt relief for our poorest members. In Africa, the culmination of the enhanced Heavily Indebted Poor Countries Initiative (HIPC) was a reduction of the external debt burden of sub-Saharan African countries by two-thirds. And we have recently gone much further. With effect from January 1, 2006, we extended 100 percent debt relief to 19 countries, including Zambia.

"In my meetings with the authorities, I encouraged them to seize the opportunity provided by debt relief, and the prospect of increased external assistance through the scaling up of aid, to build upon Zambia's improved economic performance in recent years. I particularly welcomed hearing about the Government's intention to adhere to a prudent borrowing policy and to strengthen debt management capacity. We also discussed how higher aid flows might be used for increased health and education spending, and for infrastructure investment—and this in an environment of increased private-sector led growth.

"Indeed, the private sector can play an important role in developing Zambia's infrastructure, and, having also met with members of the private sector during my visit, I welcome the emphasis being placed on much-needed improvements in the regulatory framework and overall business climate.

"The President highlighted the strengthened policies that allowed Zambia to reach the HIPC Completion Point and qualify for the Multilateral Debt Relief Initiative (MDRI). He emphasized his government's commitment to pursue sound economic and financial policies to entrench macroeconomic stability and create an environment conducive to increased private sector investment. The challenge now is to effectively mobilize all of the country's resources to accelerate progress toward improving the lives of the majority of the population.

"In addition to these contacts with the Zambian authorities, I also had the very welcome opportunity of taking part here today in Lusaka in a roundtable of Finance Ministers and other officials from Ethiopia, Ghana, Malawi, Mozambique, Tanzania, Uganda and Zambia. We discussed the opportunities and challenges all these countries face in making use of donor resources—especially the recent debt relief through the MDRI. Also taking part in the roundtable were parliamentarians, civil society representatives and journalists from these countries, which made for a very rich discussion. There was a clear consensus that, going forward, effective use of resources is key to better outcomes. In this regard, there will have to be a significant strengthening of public expenditure management systems, and countries will have to adopt a more pragmatic approach to borrowing in order to avoid renewed build-up of unsustainable external debt.

"During the roundtable, I outlined my review of the Medium-Term Strategy of the IMF, an initiative I launched last September. An important element of the review is the Fund's role in low-income countries. It is in sub-Saharan Africa that the challenges are most profound and the need for help most urgent. I appreciated the comments I received during this visit on my vision for the work of the Fund in low-income countries and look forward to reactions from today's roundtable participants over the coming months.

"Finally, I look forward tomorrow to visiting the Kasisi Children's Home, which has for many years provided care for orphaned children in Zambia and ensured that they are self-supporting once they reach adulthood."