ZAMBIA: Misuse of HIPC funds alleged

Photo: IRIN

Mwanawasa has called debt burden intolerable

JOHANNESBURG, 8 April 2003 (IRIN) - Allegations of misuse of debt-relief funds have emerged in Zambia, the International Monetary Fund (IMF) told IRIN on Tuesday. Zambia is one of the least developed countries which qualify for the Highly-Indebted Poor Countries (HIPC) debt-relief programme of the IMF and World Bank. In January this year President Levy Mwanawasa described Zambia's US $6.5 billion debt burden as "intolerable". "Each year we have to find in excess of US $200 million just to service debt. This year the figure may exceed US $300 million. Unserviced debt quickly grows, with compound interest making it even more difficult to contain," he said. Zambia is currently struggling with food shortages, brought on largely by drought, and the impact of HIV/AIDS. The IMF has estimated that without HIPC, Zambia's debt servicing obligations would have been about US $420 million in 2001. IMF resident representative Mark Ellyne explained that HIPC "savings are government funds that might have been paid for debt services, [which instead] can now be spent on social services". He added that the IMF had so far disbursed about US $450 million in interim debt relief to Zambia. However, Ellyne said allegations had emerged recently of the misuse of funds. "I think it was done at low levels and not at high levels - at district levels there were some accusations. I think there's been some investigation [of the allegations], but I'm not aware of any convictions as yet," he added. Ellyne said he could not elaborate on the specifics, nor could he "make judgements" about the allegations, which had been reported in the local media. "We are just waiting to see if the government gives us more information. Government normally does an accounting for us, a report on HIPC disbursements at the end of each year," he said. For more details on HIPC transparency