Call for more transparency in loan agreements

Zambian civil society has called for more transparency in loan arrangements between the government and donors. The call came in response to finance and planning minister Ng'andu Magande's announcement this week that donors had pledged about US $510 million to the country, following a decision by the International Monetary Fund (IMF) board of directors to restore Zambia's Poverty Reduction Growth Facility (PRGF). The PRGF is the IMF's low-interest lending facility for low-income countries. This week's announcement by the IMF also brought the aid-dependent country a step closer to reaching the HIPC Completion Point by the end of this year. "We need access to grants and not loans," said Jack Jones Zulu of the Jesuit Centre for Theological Reflection (JCTR), who sat on the now disbanded eight-member team monitoring the disbursement of funds from the donor-supported Highly-Indebted Poor Countries (HIPC) initiative. Zambia was suspended from IMF programmes after it overshot its 2003 budget by Kwacha 610 billion (about US $130 million). Since then the IMF has closely monitored the country's economic performance to ensure adherence to fiscal discipline measures agreed with the Fund. The Zambian newspaper, The Daily Mail, reported that $320 million of the new loan, repayable over five years at 0.5 percent interest, would be allocated to Balance of Payment (BoP) support during 2004. The paper reported that Magande, who was outlining the benefits of the PRGF, said "new programme aid inflows would resume, while the obvious benefit was that of qualification to the Highly Indebted Poor Countries (HIPC) completion point". As a "least-developed" country, Zambia qualifies for the HIPC debt-reduction programme of the IMF and World Bank. "We should not be celebrating the country reaching the completion point, rather we should be focused on the country's future beyond the point: drawing up good social policy and increasing transparency on public spending," Zulu commented. Before its suspension in April, the HIPC Tracking and Monitoring Team, established by the ministry of finance in 2001, identified several alleged cases of abuse of funds involving top civil servants.