It was Paris Club season again in December. With pre-meeting accolades from the IMF for the encouraging policy performance in 1993, Zambia was confident of obtaining the $1.1bn it was seeking for project and commodity aid, debt relief and balance-of-payments support in 1994. It received just over $800m.
But the pledges were not without some tongue-lashing from the donors attending the World Bank-sponsored meeting of the Consultative Group for Zambia held in Paris 9-10 December. They described the country as the "Colombia of Africa" and warned that unless measures are taken to fight drug trafficking and corruption in high places (see AB December 1993 p28), future aid could be in jeopardy. Payments support falls short
Zambia's negotiators were shopping for $340m in project and commodity aid, $275m in debt rescheduling and $560m for balance-of-payments support. Pledges of balance-of-payments support fell short of the target by $96m. The government agreed to meet the donors again in March 1994 in Paris to negotiate the debt problem and to see whether the $96m balance-of-payments gap could be filled. Whichever way the March meeting goes, the government expresses optimism that it will be able to raise the $96m locally if Zambia Consolidated Copper Mines Ltd (ZCCM) trims some of its subsidiary companies.
The conglomerate has already embarked on drastic cost-saving measures in order to remain afloat. In December 1993, ZCCM Chief Executive Edward Shamutete scrapped 850 senior positions in the company in an exercise which triggered off massive layoffs but will earn the sagging mining giant ZK40.7bn ($81.4m) in annual savings.
According to Stephen Denning, the World Bank's Director for Southern Africa, who chaired the two-day Paris meeting, Zambia has been receiving less than what it has asked for in the last three years because of the country's high level of indebtedness.
At 30 September 1993, Zambia's external debt stock stood at $6.75bn, a reduction of only $317m compared to the position at 31 December 1992. The largest portion of this debt, $2.64bn, is owed to bilateral lenders, and $1.74bn is owed to multilaterals. Zambia also owes $1.3bn to the IMF, $149m to international suppliers, $97m to the London Club and $822m in short-term loans. Praised for standing firm
Donors, however, strongly commended Zambia's commitment to the economic recovery programme, despite difficult conditions such as high rates of inflation. Bringing down inflation was the...