Zambia has expressed optimism that the debt cancellation given to the country by international creditors after attaining the Heavily Indebted Poor Countries ( HIPC) initiative would lead to more resources going to improve the country's economy.

The Bank of Zambia (BOZ) said here Saturday that the country has so far seen improved economic performance after reaching the HIPC completion point.

"The reduced debt burden is a blessing to the country because debt was having a negative impact on the country's development efforts. The debt relief has indeed given us fiscal space," Emmanuel Mulenga, BOZ's assistant director for Balance of Payments and Debt told journalists attending the bank's annual media seminar.

Mulenga said the country has posted positive economic performance, which has seen among other things the appreciation of the local currency and the lowering down of inflation rate to single digit level.

While acknowledging the improvement in the country's economy following the attainment of the HIPC completion point, the BOZ said the Zambian government should continue pursuing appropriate policies in order to consolidate the gains attained so far.

"Prudent management of the economy is required in order to avoid slipping back into an unsustainable external debt position," the bank official said.

"The implementation of prudent borrowing policy when contracting new debt and strengthening of public debt management capacity can not be overemphasized in meeting this challenge," he added.

Zambia attained the HIPC completion point in April last year, a situation that meant the country would receive debt relief amounting to an estimated 135 million U.S. dollars per year over the next 20 years. The country's debt service is also expected to fall from around 280 million dollars per year to 120 million.

In addition to the attainment of the HIPC completion point, Zambia was among the 18 African countries that qualified for the Multilateral Debt Relief Initiative (MDRI), in which the G8 countries agreed to cancel 100 percent of the debt owed.

According to the BOZ, Zambia's debt service payment will be reduced by an average of 66 million dollars per year over the period 2006-2014 under the MDRI.

The BOZ further said the country's estimated 7.2 billion dollars debt has been reduced to less than 500 million dollars.

Source: Xinhua