We join His Excellency President HAKAINDE HICHILEMA in confirming that the World Bank Executive Board has completed a review of Zambia’s Second Macroeconomic Stability, Growth and Competitiveness Development Policy Financing under the Development Policy Operation 2 (DPO 2) Financing. The review will result in the immediate disbursement of approximately US$125 Million ON GRANT TERMS.
As indicated in our statement on Wednesday, the approval of the 2nd review of Zambia’s Extended Credit Facility (ECF) and the subsequent disbursement of US$187 Million by the IMF (IMF Africa), opened the way for the World Bank to proceed with its decision at the sitting of the Executive Board at its headquarters in Washington DC, USA, yesterday.
THE US$125 MILLION GRANT from the World Bank is part of its multi-sectoral support to help Zambia to restore macroeconomic stability, make progress towards debt sustainability, and promote private-sector-led inclusive growth. The DPO 2 is also meant to sustain the gains made under the Development Policy Operation One (DPO 1), approved in October, 2022, and which resulted in the disbursement of approximately US$275 Million from the Bank. Total disbursements from DPO 1 and DPO 2 now stand at US$400 Million.
The Minister of Finance and National Planning Dr. SITUMBEKO MUSOKOTWANE, management and staff, join President HICHILEMA in welcoming the World Bank’s grant support of US$125 Million. The facility will boost our efforts in resolving economic challenges. To ensure that we remain on the path of economic reconstruction, we will continue with fiscal and structural reforms and through the DPO 2, enhance efforts aimed at restoring fiscal and debt sustainability; increasing farmer productivity and access to markets; ensuring sustainable access to energy; and uprating access to finance and private sector development. A more predictable investment climate will increase external financing, boost Zambia’s competitiveness and create more prospects for jobs and better livelihoods for citizens.
We are glad that the DPO 2 grant facility arrives at a time when we need to strengthen measures that will unlock private financing for green investments, increase the resilience of agriculture and electricity generation to climate shocks, and diversify Zambia’s energy mix to non-hydro renewables. The grant will contribute to addressing some of the developmental challenges by supporting critical growth-enhancing and competitiveness reforms, while seeking to reduce poverty on a more livable planet. Expectedly, the DPO 2 aligns with Zambia’s Eighth National Development Plan (8NDP) and the World Bank’s policy commitments in governance and institutions, and jobs and economic transformation. Above all, the initiative will support the Government in the process of acquiring deep debt restructuring under the G-20 Common Framework for debt treatment beyond the Debt Service Suspension Initiative (DSSI). Prudent stewardship of public finances will reduce Zambia’s public debt burden and free-up public resources to invest in the Zambian people – which is central to DPO 2.
As stated by President HICHILEMA during the Presidential Press Conference, today, the new dawn administration is development focused and result-oriented. To achieve the objectives of our transformational reforms, the Government will continue with measures aimed at boosting private sector investments and rebalancing the composition of public expenditure by re-prioritising investment projects, withdrawing heavy state intervention from some economic sectors, transforming agricultural subsidies, and investing in human development. The DPO 2 provides one of the platforms for achieving some of our transformational reforms.
The DPO 2 will also continue to support Zambia at a crucial time to implement policy and institutional reforms, seek to restore macroeconomic stability, achieve debt sustainability, and promote private sector-led inclusive growth in line with Zambia’s development aspirations. These reforms are foundational to the four strategic development areas identified by Government as espoused in the Eighth National Development Plan (8NDP). These are Economic Transformation and Job Creation; Human and Social Development; Environmental Sustainability; and Good Governance Environment.
Finally, we are glad that the DPO2 support will deepen our reform agenda by strengthening actions aimed at enhancing public debt management, improving agriculture productivity, strengthening energy access, and unlocking access to finance, stimulate private investments, and drive an inclusive, resilient and green growth. The policies and actions outlined in DPO 2 will go a long way towards achieving the country’s recovery and inclusive prosperity agenda as outlined in the 8NDP and Vision 2030. Finance Minister reiterates his call that in order to implement the reforms, there will also need to be ongoing communication and cooperation with the business community, civil society, local governments, and development partners.