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Paris Club reduces Zambia's outstanding debt by $1.796 billion
By Reshmi Basu
New York, May 12 - The Paris Club creditor countries said they would reduce Zambia's outstanding debt by $1.796 billion as part of an initiative to provide relief to impoverished indebted nations.
The Paris Club members are asking their governments to erase $1.403 billion of the country's external debt as granted under the terms of the Enhanced Debt Initiative for Heavily Indebted Poor Countries (HIPC) as laid out by the International Monetary Fund and the International Development Association.
Additionally, the members will grant $393 million in bilateral debt relief.
Zambia's debt to Paris Club creditors has been reduced to $124 million from $1.920 billion as a result of the assistance.
The members also agreed to reschedule 50% of the payments due in 2005, 2006 and 2007 on the debt remaining due after additional bilateral cancellation.
The decision reflects the nation's strong commitment toward poverty reduction programs and economic reforms, according to the release.
The members cited that Zambia had reached its completion point under the enhanced HIPC initiative on April 8 and that the freed funds would be used for priority areas identified in the country's poverty reduction strategy. Also the members added that the southern African nation would seek comparable treatment from all its other external creditors including other creditor countries as well as commercial creditors.
The International Monetary Fund estimated that the nation's public debt was $7 billion in nominal value at the end of 2003.
Formed in 1956, the Paris Club is an informal group of creditor governments from major industrialized countries.
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