ECONOMY-ZAMBIA: Paris Club Meeting Stirs Anxiety

By Lewis Mwanangombe Reprint | | Print |

Lewis Mwanangombe

LUSAKA, Apr 5 1998 (IPS) - Zambia will have its annual meeting with the ‘Paris Club’ next month with a new finance minister heading its delegation – and a poor track record on good governance.

According to political observers, the combination could spell disaster at the meeting where Zambia will be seeking the disbursement of needed funds to keep its economy and economic reform programme on a smooth path.

Last month, President Frederick Chiluba sacked his long-serving Finance Minister Ronald Penza, considered by many Zambians to be the darling of the donor community. He has been replaced by Edith Nawakwi, who held the portfolios of Energy and Water Development and of Agriculture, Food and Fisheries.

Although Nawakwi has been apart of past delegations to the consultative meeting with the donors, some Zambians are sceptical about her ability to steer the economy. Nawakwi’s main task in Paris will be to convince the donors to release the bulk of the funds promised for balance of payment support and for general financing, observers said.

At the July 1997 meeting with the ‘Club’, Zambia’s external partners had promised at least 150 million U.S. Dollars in balance of payments support, plus an additional 285 million U.S. Dollars for general financing. But by December 1997, only the World Bank had come through with 42 million U.S. Dollars for balance of payment support. Most of the donors continued to withhold funds, citing Zambia’s poor performance on governance.

The donor community was particularly irked by the Chiluba government’s handling of the October coup attempt by junior army officers. The government detained more than 90 persons, including former Zambian leader Kenneth Kaunda, delayed in bringing charges against those detained, and imposed a state of emergency which was lifted recently.

Zambia’s donors not only kept their cheque-books closed, but also refused to meet the government delegation last December as scheduled. If Finance Minister Nawakwi fails to convince the Paris Club in May to release funds to this Southern African nation, one of the major programmes that will be in jeopardy is the Public Service Reform Programme (PSRP).

Phase II of the PSRP was scheduled for this May. Last December, some 6000 daily paid employees – messengers, cleaners and drivers – were laid off with a promise that their redundancy packages would be promptly paid. Although some of the laid off workers received their pay in February, others are still struggling to claim their monies.

PSRP, which began in November 1993, calls for the retrenchment of 80,000 public workers. It also aims to build the capacity of those remaining in government, and gives support to the ‘Future Search Project’, which provides entrepreneurship skills for those retrenched from the public service.

Labour and Social Security Minister, Newstead Zimba, says however, that with or without donor funding, the process of thinning the civil service will continue smoothly as a sum of 116 billion Zambian Kwachas (about 70 million U.S. Dollars) has been set aside to meet the cost of laying off civil servants after May.

Finance Minister Nawakwi agrees, and says she expects no surprises at the May consultative meeting. The continuation of the economic reform programme, bridging of the financing gap in the 1998 Zambian budget, poverty reduction and the stimulation of growth will be the main topics on the table, she adds.

Zambia’s debt, which amounts to about 10 percent of Gross Domestic Product, will also come up for discussion once again in Paris. But Nawakwi appears not to be worried by the task before her.

“I know the debt burden is high, but I am sure we can make it manageable. In this regard, the donor support should be seen as a temporary helping hand and the burden of turning around our economy still rests squarely on our shoulders,” Minister Nawakwi says.