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Zambia: Country Contracts $79m IMF Loan
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The Times of Zambia (Ndola)
6 June 2008
Posted to the web 6 June 2008
Ndola
The International Monetary Fund (IMF) has agreed to release a $79.2 million loan to Zambia over the next three years in support of the country's economic policies aimed at reducing poverty and sustaining economic growth.
IMF deputy managing director, Takatoshi Kato said in a statement released in Lusaka yesterday that the approval of the new Poverty Reduction and Growth Facility (PRGF) follows Zambia's impressive record after the last facility in ended last September.
"The authorities remain committed to maintaining macroeconomic policies and pursuing structural reforms to sustain high economic growth, further reduce poverty, diversify the economy, and preserve macroeconomic stability and debt sustainability.
"The decision enables Zambia to request the first disbursement in the amount of about $11.3 million," Mr Kato said.
The PRGF was the IMF's concessional facility for low-income countries. PRGF loans had an annual interest of 0.5 percent and were repayable over 10 years with a five-and-half year grace period on the principle payments.
Mr Kato urged Zambia to strengthen its debt management to ensure that new borrowing did not push the country back into deep debt, after its debt was written off.
"The programme envisages a cautious policy on foreign borrowing, emphasizing concessional loans and close monitoring of external borrowing by public enterprises.
"To preserve the recent gains in external debt sustainability, the authorities will give priority to developing and implementing a comprehensive debt strategy," Mr Kato said.
He said the new tax regime for the mining sector would provide substantial resources for infrastructure development and social spending but cautioned Zambia not to scare away the mining investors.
"In implementing the new regime, the authorities are encouraged that the attractiveness of investment in the mining sector is preserved," Mr Kato said.
Mr Kato also asked the Zambian government to address supply shortages and inefficiencies in the energy sector.
He said prudent monetary policy helped Zambia keep inflation low and urged the country to maintain the flexible exchange rate system to enhance the effectiveness of monetary policy and enable the economy adjust to shocks.
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Under the last PRGF, the IMF in June last year agreed to give Zambia a loan amounting $33.4 million after approving the last two performance reviews of a $320 million financing deal with the southern African country.
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