Zambia achieves overwhelming debt cancellations this year

Zambia achieved overwhelming debt cancellations this year under the enhanced Highly Indebted Poor Countries (HIPC) initiative, said a World Bank report reaching in Lusaka Friday.

According to the report, the southern African country managed to attain HIPC completion point in April 2005 when it had made satisfactory progress in meeting the conditions given by its creditors.

After attaining a completion point Zambia's debt was reduced by 3.9 billion US dollars in nominal terms from the initial 7.1 billion dollars which was the debt stock estimated at the end of 2004.

Zambia's Paris Club creditors had also helped ease Zambia of its debt by canceling over 1.4 billion dollars in May 2005.

The stock of debt owed to Paris Club would be reduced by a further 393 million dollars by the creditors who have committed themselves to do it on a bilateral basis to help grant further debt relief.

In total the debt write-off is 1.8 billion dollars which had left a balance of 124 million dollars post cut-off debt that was owed to the Russian Federation.

The Zambian government held negotiations with the Russian Federations in line with the Paris Club Agreed Minute in December 2005 and signed a bilateral agreement on the settlement of the outstanding debt.

In that agreement 100 percent of the pre cut-off debt was canceled while 50 percent of the maturities of principal and interest on the post cut-off debt falling due from 2005 to 2007, amounted to 43.6 million dollars, were deferred.

The amounts would be paid from 2009 to 2011 so as to attract a lower interest rate than the remaining amount of 88.5 million dollars of maturities falling due from 2005 to 2007 and amounts due beyond 2007 shall be paid on due dates.

Source: Xinhua