An Evaluation of The Strengths And Weaknesses of Public Debt Management in Zambia And Management Legal Review

Zambia’s external debt has had a number of effects on the Zambian economy. The HIPC debt agreement, coined in 1996 to help countries like Zambia faced with a huge debt problem and a high fiscal deficit resulted in Zambia qualifying for debt relief under the HIPC programme in December 2000 when the country reached the decision point. On 11th April 2005, Zambia acceded to the HIPC Initiative and in June 2005 the Multilateral Debt Relief Initiative (MDRI), at which moment most of its debt had been written off by its Creditors. The debt that stood at US$7.1 billion at the end of 2004 was reduced by 36.1 percent to US$4.5 billion at the end of 2005. This was as a result of cancellation by most members of the Paris Club. As at the end of 2006 the stock of debt reduced further by 66.5 percent to US $1.5 billion from US $4.5 billion recorded in 2005. Jubilee-Zambia having been in the forefront of debt campaigns put up this study that is aimed at formulating a basis for a comprehensive public debt management reform proposal for Zambia by reviewing the strengths and weaknesses of the prevailing policy, legal and institutional framework for debt management in Zambia, The aim is for Jubilee-Zambia to use the findings of this study to engage policy makers and government bureaucrats in meaningful advocacy for a strong, transparent, cost effective and accountable debt management in Zambia. Zambia's use of the IMF Debt Sustainability Framework (DSF) in managing its debt is not adequate as this does not take into account human development spending. For example it is detached from the expenditure for the attainment of Millennium Development Goals (MDGs) which is the justification for the HIPC and MDRI initiatives.