WORLD BANK STATEMENT
World Bank Welcomes the Common Framework Statement by Zambia’s Creditors
WASHINGTON, July 30, 2022
The World Bank Group welcomes the Statement of the Creditor Committee for Zambia that was issued today under the Common Framework for Debt Treatments beyond the DSSI. The statement describes the Creditor Committee’s commitment to provide long-term debt relief that matches the Zambian authorities’ ambitious fiscal and structural reforms.
The World Bank urges the Creditor Committee to reach a quick agreement on the specifics of deep debt relief for Zambia that is consistent with the upper-credit-tranche program of the International Monetary Fund (IMF) and the joint World Bank-IMF Debt Sustainability Assessment. The World Bank expects commercial creditors to promptly agree on a comparable debt treatment for Zambia that would achieve debt sustainability over the medium term. A common discount rate should be utilized in measuring the debt relief provided by bilateral and commercial creditors to ensure comparability of treatment.
In 2021, Zambia’s per capita income declined to $1,040 and the country was re-classified as low-income for the first time since 2011. This follows several years of decline in Zambia’s GNI per capita, starting with $1,440 in 2018. With the economy further weakened by the pandemic, 60 percent of the Zambian population lived on less than $1.90 a day in 2021. Without a timely debt resolution, this trend will continue to wipe out the development gains that Zambia achieved in the past two decades.
“I very much welcome today’s announcement as an important step toward reducing Zambia’s debt,” said World Bank Group President David Malpass. “Significant debt relief is needed to secure long-term debt sustainability and attract the investment necessary for growth and poverty reduction. I urge official bilateral and private sector creditors to participate on comparable terms, granting Zambia a substantial net-present-value reduction in debt.”
The World Bank provides large net positive flows to Zambia to boost sustainable growth and poverty reduction. Through 2032, the World Bank plans to support Zambia with new financing of over US$2 billion in the form of concessional loans. This includes financing for investment projects in agriculture, education, energy, health, and social safety nets as well as policy-based lending in support of the structural reforms that the Government of Zambia is implementing. These programs would add to the over US$520 million in fresh financing committed by the World Bank to Zambia in the last fiscal year.
The World Bank is working closely with the IMF, the G20, and the Creditor Committee to support the Common Framework process as a path to long-term debt sustainability. Restoring macroeconomic and debt sustainability, strengthening governance, and promoting private-sector-led inclusive growth are critical areas of our work with the Zambian government. The World Bank is determined to support the Common Framework and the Zambian authorities in these endeavors.
Contacts:
In Washington: Marcela Sanchez-Bender, +1-202-473-5863, msanchezbender@worldbankgroup.org
In Zambia: Carlyn Hambuba, +260-211-373-218, chambuba@worldbank.org