US, Zambia sign pact on 100 percent debt cancellation

The United States signed an agreement in Lusaka Friday with the Zambian government on canceling the latter's debt owed to its government totally.

The agreement, which cancels Zambia's 280 million US dollars in debt, is a consequence of the country's qualification for debt relief under the Heavily Indebted Poor Countries (HIPC) initiative.

The US Ambassador to Zambia, Carmen Martinez, said cancellation of Zambia's debt was part of a joint effort to reduce poverty in the southern African country.

Martinez said weak fiscal control had a long history in Zambia and heavy borrowing and large arrears used to be entrenched habits.

"But we are here today to sign this agreement because those habits, like Zambia's onerous external debt, are on their way to become a part of history," Martinez said.

She then called upon officials in the country to say no to irresponsible spending so as to make sure that debt would no longer be the foundation of the government's budget.

Zambia's Minister of Finance Ng'andu Magande promised that the resources freed by this debt cancellation would be put to good use for the benefit of Zambian people.

The debt relief came shortly after the French government decided to cancel Zambia's 67 million euros (about 80 million dollars) debt on Wednesday.

Zambia reached the completion point under the HIPC initiative in April this year after which it approached its Paris Club creditors with a request for cancellation of all its eligible debt.

This resulted in Zambia signing with the group in May the Paris Club Agreed Minute under which the creditors including the United States and France agreed to extend to Zambia the much needed debt relief which was up to 1.8 billion dollars.

Already, the International Monetary Fund (IMF) had announced its plans to cancel Zambia's debt of 577 million dollars next year while the World Bank and the Africa Development Bank (ADB) are expected to meet and determine the amount of debt relief for the country.

The finance minister said Zambia expected its foreign debt to reduce to about 502 million dollars, down from 7 billion dollars before reaching HIPC completion point.

Source: Xinhua