World Bank gives Zambia US$10m for EMGC programme

World Bank gives Zambia US$10m for EMGC programme
By Kabanda Chulu
Saturday August 09, 2008 [04:00]

THE World Bank has given Zambia US$ 10 million under the second phase of the Economic Management and Growth Credit (EMGC II) programme. It is envisaged that the credit's reform programme and objectives would aim to contribute to the government's efforts to maintain and deepen the country's macroeconomic framework that would be conducive to a robust growth.

Other objectives include the strengthening of the credibility and institutional capacity of the public sector and to enhance Zambia's growth opportunities.

World Bank Task Manager Jos Verbeek stated on Thursday that the focus of the EMCG II-supported programme is partly a continuation of the reforms initiated under the EMCG I and the proposed credit of US$ 10 million is the second Development Policy Lending Operation (DPL) to support policy and institutional reforms as outlined in the Country Assistance Strategy (CAS).

"The CAS envisages that over the four-year period implementation, there could be two multi-tranche DPL operations or one multi-tranche plus two single-tranche DPL to support CAS implementation," Verbeek stated. "But to achieve these objectives will depend on the implementation of specific reforms in the areas of public sector management, macro economic management including the reduction of arrears and the establishment of a credit rating bureau."

The proposed operation is part of a joint effort by cooperating partners in Zambia to provide predictable and performance related budget support to the country and the proposed amount of US$ 10 million will finance 100 per cent of the foreign exchange costs of eligible imports.

Verbeek stated that benefits of the proposed operation were two-fold.
"First, it will assist the government through policy and institutional changes to better manage the economy and better direct resources to those programmes that will have the highest economic and social return as a means to increase growth and reduce poverty," stated Verbeek.

"Most of the process changes aim to support durable (fiscal) adjustment while preparing for tomorrow's growth and lastly to improve the poverty impact of Zambia's growth since the financial resources themselves will reduce the need for additional domestic borrowings that would further crowd out resources available for investments by the private sector and as a consequence also negatively affect interest rates."