The World Bank will cancel 2.7 billion U.S. dollars of Zambia's debt under the Multilateral Debt Relief initiative (MDRI), the bank said in a statement issued Friday.

After the country reached the Highly Indebted Poor Countries (HIPC) initiative completion point in April 2005, 885 million dollars of debt has been canceled.

World Bank President Paul Wolfowitz was quoted as saying that the additional debt relief will help Zambia channel resources into programs that directly help people who need it most.

The statement said countries that have reached the HIPC completion point are eligible for an additional relief under the Multilateral Debt Relief Initiative.

World Bank Country Representative Ohene Nyanin said Zambia can now boost of fiscal space for economic development.

Zambia reached the HIPC completion point in April 2005 and its external debt stood at 4.5 billion dollars at the end of 2005.

Under the MDRI various international financial institutions including the World Bank will cancel 100 percent of the debts Zambia owes them. Thus the southern African country will save annually about 180 million dollars in debt service.

Source: Xinhua