IMF the main beneficiary of Zambia’s HIPC debt deal

An analysis carried out by the newly-launched "JubileePlus" – reveals that in 2001 – 2005 Zambia will be paying substantially more to the IMF and World Bank than other creditors under the "enhanced" HIPC debt deal. The IMF and WB will jointly collect US$ 89 million in 2001, more than 50% of the total debt payments that Zambia will make this year. The IMF alone will collect $74 million of the $172 million Zambia will pay in 2001.

The IMF was set to collect even greater sums from Zambia before protests from OXFAM and Jubilee 2000 forced changes to the rules of the HIPC scheme. As a result the IMF is providing "interim assistance" to Zambia in the form of grants to help with debt repayments – to the IMF. This assistance was agreed after public uproar at a "debt relief" scheme that would have resulted in Zambia paying more in debt service after relief, than before.

Ann Pettifor, programme director of Jubilee Plus said: "The IMF’s "interim assistance" only postpones the day of reckoning for Zambia, by three years. After that, Zambia’s debt service payments to the IMF rise dramatically – and will once again become unsustainable. The IMF is using cosmetic devices to obscure the reality that the HIPC scheme benefits creditors rather than debtors"

Zambia reached the Decision Point stage in December 2000 together with 9 other countries. Zambia was granted US$3.8 billion as total debt relief from all its creditors, equivalent to US$2.5 in Net Present Value terms. However, Zambia’s debt payments obligations rise steeply from $65 in 2003 to $119 million in 2004 when interim assistance from the IMF will end. These disbursements will make it even more difficult for Zambia to release resources from her budget for poverty reduction initiatives.

Adrian Lovett of "Drop the Debt" – the other successor organisation to Jubilee 2000 said:

 "This is clear evidence that the IMF and World Bank are simply not cancelling enough debt. Zambia is facing a devastating HIV crisis. Rich creditors who have huge gold reserves and untapped loan-loss accounts do not need Zambia's money. The G8 have promised to cancel 100 per cent of the debts they are owed by Zambia and other impoverished countries. As majority shareholders, they must instruct the IMF and World Bank to do the same. Otherwise, nations like Zambia will still be forced to take out new loans and divert aid money just to keep up with payments."

Notes:

Jubilee Plus is one of the official successor organisations to Jubilee 2000. It is a global support unit for campaigners working on international debt and finance issues and.is based at the New Economics Foundation, 6-8 Cole St., London SE1 4YH. Jubilee Plus is maintaining the Jubilee 2000 web site, while its own site is under construction. The new site is expected to be up and running soon. Drop the Debt is another successor organisation, focusing on campaigning for a new deal at the Genoa Summit in late July, 2001.