Germany gives US $207 million in debt relief

A decision this week by Germany to cancel around US $207 million of Zambia's debt could free up funds for poverty reduction, officials said on Tuesday. The amount represents 100 percent of the debt incurred by Zambia under bilateral agreements made with Germany over the past decade. Associated Press (AP) reported German Ambassador to Zambia Erich Kristof as saying: "Means budgeted to repay these debts in 2003 and the years to come can now be put to use in the interest and for the people of Zambia." Under the agreement the southern African country will be exempt from repaying the principal as well as debt servicing accrued from January 2001 to March 2003. The decision was taken in line with the Enhanced Debt Relief Initiative launched during the June 1999 G-8 summit in Cologne, Germany. The initiative aims to further assist developing countries struggling to cope with external debt servicing, often blamed for underdevelopment. Meanwhile, Zambian Minister of Finance and National Planning Emmanuel Kasonde has appealed to Germany to refund the $3.7 million already paid in debt servicing in 2001-2003. Zambia's external debt amounts to around US $6.5 billion. Observers have pointed out that the country's debt servicing obligations exceed annual spending on health, education, water and sanitation and other welfare projects combined.