Zambia's reform plan enters next stage.


New financial backing from the World Bank's International Development Association (IDA) is to help Zambia to build on three Years Of economic policy reform by supporting the next phase of the country's economic regeneration.

A SDR108.9m ($150m) credit approved in March is to provide vital balance-of-payments financing to the heavily debt-burdened government as it continues to restructure Zambia's weakened economy. The credit is the IDA's third to promote Zambia's difficult policy reforms since 1991.

Among other things, Zambia is to be able to use the credit as a source of the foreign exchange it needs in order to import goods and services that are in short supply, including equipment to improve agriculture and build industries.

At the same time, the Zambian government has pledged to continue its reforms in three priority areas: increasing economic stability energising the private sector and improving basic services to help the poor.

"This is an advanced adjustment programme, an opportunity that has been created because they have taken some of the hard decisions," comments Steen Jorgensen, a Senior Economist in the World Bank's Southern Arica region. "They have been very aggressive on the privatisation and stabilisation fronts."

The need now, Jorgensen maintains, is for programmes to take advantage of the good groundwork which Zambia has laid. The new credit, for example, specifies programmes that spur economic activity and deliver better social services to the poor, who have suffered under some of the reforms.

Drawing on the country's widely praised response to the recent drought, when the maize crop fell to one-third of domestic needs, Zambia has begun to shift some of the authority for social services to well-positioned local governments, to non-governmental organisations and to church groups.

"In many ways," Jorgensen claims, "the drought-relief experience was very good. They're now applying those lessons for safety-net programmes."

Under the new credit, the government is to continue to decentralise social services, to restructure the budget for Health, Education and Water programmes and to continue civil-service reform. Zambia's increasing emphasis on social services is to help to bolster public support for continuing the aggressive economic-reform programme that has pulled the country from near ruin...

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