The UK’s official export credit agency, the Export Credits Guarantee Department (ECGD), has written off US$213mn of Zambia’s debt following a meeting of the Paris Club, an informal group of sovereign creditors that includes representatives from the British government.
ECGD has previously written off US$316mn of debt owed by Zambia, which is classified as a heavily indebted poor country.
This latest debt treatment cancels all of Zambia’s sovereign debt to the UK. The debt originates from claims paid by ECGD on business insured or guaranteed prior to 1983.
The sovereign creditors – which mainly include countries that belong to the OECD – agreed to cancel in total US$1.4bn of Zambia’s stock of debt at the Paris Club meeting (May 11, 2005) as their contribution toward Zambia’s debt sustainability. In addition, the sovereign creditors agreed to provide additional bilateral debt write-off of US$393mn for the African nation.
Zambia is committed to allocating the resources freed by all debt write-offs to priority areas identified in the country’s poverty reduction strategy which include: combating HIV/Aids by integrating awareness and prevention; strengthening basic health services for the poor; and improving the availability of, and access to, education.