IMF rejects Oxfam’s claims

There is no basis for recent statements by Oxfam that the Heavily Indebted Poor Countries (HIPC) debt relief initiative “worsens” Zambia’s financial position, the International Monetary Fund’s (IMF) Africa department associate director Ernesto Hernandez-Cata said in a letter to London’s ‘Financial Times’.

On the contrary, argued Hernandez-Cata, the HIPC initiative will reduce Zambia’s external debt by 60 to 65 percent, and debt service payments in 2001 will be cut as a result of the initiative from nearly $60 million to $225 million. After 2001, Zambia’s debt service payments are projected to drop sharply further, to reach single digits as a percentage of exports from 2005.

“It is true,” wrote Hernandez-Cata, “that despite these efforts, debt service payments next year will be higher than this year, because of repayments to the IMF, which have been zero for a number of years. But this is not a proper basis for an assessment of the impact of HIPC,” said Hernandez-Cata. He said the IMF is front-loading its HIPC assistance to Zambia, providing close to 60 percent of all HIPC initiative assistance in 2001-2002.