World Bank conditionally agrees to extend budget support as Zambia denies signing $800 million loan with China

The World Bank has agreed to extend budget support to Zambia once the country gets on a programme with the International Monetary Fund (IMF).

The Bank made the agreement with the government during a virtual meeting which was held between Finance Minister Bwalya Ng’andu and World Bank Vice President for the African Region, Dr Hafez Ghanem last week.

The Minister and the World Bank Vice President also discussed Zambia’s macro-economic environment, fiscal health, liability management and public debt sustainability.

Dr Ng’andu further took the opportunity to inform Dr Ghanem that Zambia has now finalized the procurement process for financial and legal services to assist in the liability management exercise of the country’s external debt.

And Dr. Ghanem told Dr Ng’andu that a progressive outcome of the country’s consultative and information exchange engagement with the IMF will be a launch-pad for the Bank’s budget support.

The Minister was supported in the Virtual meeting by Deputy Secretary to the Cabinet -Finance and Economic Development- Christopher Mvunga and Permanent Secretary -Economic Management and Finance Mukuli Chikuba.

Others included World Bank Country Manager for Zambia Dr. Sa Pundeh.

And Government has not signed any loan of 800 million U.S dollars with any Chinese lender for a railway construction project as implied by some sections of the media.

Finance Minister Bwalya Ng’andu made the clarification during virtual talks with World Bank Vice President for the African Region, Dr Hafez Ghanem who sought clarification on the matter.

He emphasised that the memorandum of understanding signed by a representative of the transport line Ministry does NOT constitute any loan agreement.

And Dr. Ghanem took note of the clarification.

The Minister and the World Bank Vice President also discussed the listing of Zambia as one of the eligible countries for relief under the Debt Service Suspension Initiative; a programme designed to provide fiscal space to help countries respond to COVID-19 health challenges and economic shocks.

Dr Ng’andu acknowledged receipt of an advisory note on the matter and on the G-20 debt relief initiative.

And Dr. Ghanem encouraged Zambia to continue pursuing relief under the initiative.

The Minister also pledged commitment to address debt service payments that fell due before the 1st of May 2020.

Dr Ghanem was also briefed by Dr Ng’andu on Zambia’s Covid-19 response where he was accorded a perspective of the pledges and commitments from Cooperating and Development Partners to the country’s Covid-19 response.

The Minister confirmed to Dr Ghanem that the Government was using its own budget resources to support the country’s health systems as pledged donor disbursements by some development and cooperating partners were also rolling-in.

He appealed for firm support from development and cooperating partners to help the country’s health systems to remain strong, sustainable, and resilient enough to deal with other non Covid-19 related health sector challenges.

This is according to a statement sent to ZNBC News by Ministry of Finance Spokesperson Chileshe Kandeta.