IMF disburses US $28 million

The International Monetary Fund (IMF) has approved a loan of US $28million to Zambia following the country’s qualification to the second stage of the Enhanced Structural Adjustment Facility (ESAF) initiated three years ago. A Zambian finance ministry official refused to disclose to IRIN how the money would be allocated, except to say: “This is part of the US $349million that has been agreed with the IMF to support economic and financial policies for the period 1999 to 2001.” However, an IMF press release said the government’s objectives for the 1999 economic and financial programme were to achieve real Gross Domestic Product (GDP) growth of 4 percent, reduce inflation to 15 percent and strengthen gross reserves to the equivalent of one-and-a-half months of imports. A representative of Jubilee 2000, a pro-debt cancellation lobby group, told IRIN that loans to Zambia from the IMF were dependent on conditions such as privatisation and curtailing of spending on social services. “Conditions imposed by the ESAF three years ago have led to untold hardships such as retrenchments and a stringent cash budget for schools and health sectors,” Father Peter Henriot said. “We need to have public transparency regarding any future loans that the government plans to acquire.” Cardino Uwishaka of Zambia’s Campaign Against Poverty, said the Zambian health system has been buckling under pressure from the results of the government’s reform programme. He told IRIN: “Since 1995 there has been a chronic shortage of drugs in clinics. We have received reports of sick people being turned away from clinics because they could not afford to pay for medicines.” Last year, economic analysts said, the Zambian economy suffered serious setbacks, owing to adverse external developments, including the pronounced fall in copper prices, unfavourable weather conditions and unexpected delays in the privatisation of the Zambia Consolidated Copper Mines (ZCCM). The national currency, the Kwacha, depreciated by 39 percent, and international reserves fell by US $170 million to US $44 million at the end of 1998, or less than two weeks of import cover. Real GDP contracted by an estimated 2 percent in 1998, compared with growth of 3,5 percent in the previous year as copper production declined sharply and agriculture was affected by the El Nino phenomenon. A 35 percent decline in metal exports contributed to a significant weakening of Zambia’s external position in 1998. Poverty remained a pressing problem in Zambia. According to World Bank estimates, in 1996 about 70 percent of Zambians were living in poverty, with 58 percent of the population lacking basic nutrition. At the same time, most donors said they were likely to resume balance of payments support to the country after the government and South African-owned mining giant Anglo American Corporation signed a memorandum of understanding in January on the sale of Nkana and Nchanga copper mines. The two mines account for about 65 percent of ZCCM’s total output. Meanwhile, the ‘Zambia Daily Mail’ at the weekend quoted Zambian President Frederick Chiluba as saying the wage disparities in the country were scandalous and directed that the situation should be normalised with immediate effect.