Zambian finance minister calls on creditors to find a “creative solution” as debt relief scheme sees Zambia's debt repayments increasing by $70 million a year

Following the World Bank and IMF meetings in Prague, Zambian Finance Minister Katele Kalumba has appealed to multilateral financial institutions to find a creative solution to Zambia's debt conundrum. As a result of qualifying for the international debt relief scheme (the HIPC initiative), which is designed to cut debt payments to a “sustainable level”, the country will actually be paying more money to creditors than before, as highlighted in an Oxfam report prepared for the Prague meetings.

Katele Kalumba told a news conference in Lusaka: “What we expect is a creative, visionary and intelligent resolution of Zambia's case. We have done everything in our power to make our case known to the rest of the world and to knock on all the doors that matter for Zambia to be given a hearing".

In Prague, Gordon Brown, the Chair of the IMFC, admitted that Zambia's position was unacceptable and promised to that the problems would be resolved. Zambia paid $137 million to creditors in the last year, but when the country qualifies for the first stage in the HIPC initiative in December, annual payments will rise to $200 million. This is as a result of old IMF loans becoming due.

Kalumba appealed to the international community to act quickly to get a new deal for Zambia, who has fulfilled onerous conditions to qualify for HIPC: "What we have been pushing for in the recent past is not only to qualify for HIPC, but also for better terms when we qualify than the current formula." Even if adjustments are made to reduce Zambia's payments broadly in line with other countries qualifying for HIPC, this will only amount to a one-third cut. Kalumba made it clear that this would not be enough.

Jubilee 2000 in Zambia welcomed the fact that the IMF had promised to reconsider the Zambian case, but put forward the case for 100% cancellation: “We have called upon Zambia's creditors to join hands in considering 100 percent debt cancellation and consider giving Zambia grants and not new loans to resolve the debt crisis. Today, Jubilee 2000-Zambia is repeating that call. We urge all creditors, especially the International Monetary Fund, not to give us new loans to pay debts, Zambia needs grants.”

In Zambia, nearly one million people are infected with HIV out of a population of nine million. Junior doctors have been on strike for months because the government cannot afford to pay wages, and the supply of basic drugs is severely limited.