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A Letter to the Editor of The Post of Zambia
By David Andrews, IMF Mission Chief
Lusaka, Zambia
October 21, 2004

The following letter was sent to The Post of Zambia in response to an article about a recent staff visit to that country. The editors declined to publish the letter.

Dear Sir,

I am writing in response to your front-page article by Larry Moonze on October 20, in which I was reported to have said that "Zambia will only reach the HIPC completion point after it disposes of the Zambia National Commercial Bank".

I have not met or been interviewed by Mr. Moonze, so I was surprised to read his account of my alleged statements at the IMF mission's meeting with trade unions on October 18. The article actually appears to be based solely on statements by FFTUZ Vice President Teza Nchinga. This account of the meeting contains many distortions and misrepresentations. A clarification is needed in the interests of transparency, which we certainly support and many called for at the meeting.

Mr. Nchinga asked repeatedly whether the privatization of the Zambia National Commercial Bank (ZNCB) was a precondition for reaching the HIPC completion point. Each time my answer was factual. Among the HIPC trigger conditions approved in December 2000 by the Boards of the World Bank and IMF was the issuance of an offer for bids to purchase equity in ZNCB. I clearly explained that this condition had already been met. Moreover, I explained that the trigger condition was not the bank's sale because such a condition would have put the Government at a disadvantage in negotiations for the sale. It is my understanding that the Zambian Government plans to conclude the sale of equity in this bank. I made no statement about the financial condition of the bank, as the article incorrectly states.

I was also asked whether the Government should budget for a wage increase in 2005. My answer was that it was for Government to decide, taking into account its assessment of the need to hire workers in priority sectors. However, I did clarify that the Government's policy of holding the wage bill at 8 percent of GDP did not imply a wage freeze; rather it meant that the wage bill could grow in line with growth in the economy and underlying inflation.

We very much welcome the opportunity to discuss issues of concern to the unions and other members of Zambian civil society. Such meetings provide a constructive platform to discuss the many challenges facing Zambia. It is important, however, that these meetings be reported accurately.

Sincerely yours,

David Andrews
IMF Mission Chief
Lusaka, Zambia




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