Statement by Wan Abdul Aziz Wan Abdullah at the meeting of October 7, 1999

[ntemational Bank for Reconstruction and Development 86595 International Development Association International Finance Corporation Multilateral Investment Guarantee Agency FOR OFFICL<\L USE ONLY CONFIDENTIAL EDS99-293 October 6, 1999 03:22:23 PM Statement by Wan Abdul Aziz Wan Abdullah Date of Meeting: October 7, 1999 Zambia: Country Assistance Strategy We welcome the discussion of this paper today. At the outset, we would like to thank staff for the candid analysis contained in this excellent document and also for providing the recent update on the CAS. In this regard, we are pleased to note that some progress has been made with regard to the privatization of ZCCM, the majority government-owned copper mining company. Zambia, despite its rich endowment of copper, has remained among the most heavily indebted and poorest countries in Africa. It is good to know that following the general election in 1991, the country has embarked upon a far-reaching economic reform program in line with liberalization and a market-based economy. However, some of the challenges the country is presently facing include the recent decline in GDP, the delay in the privatization of the copper mines, a steep decline in copper revenues, a heavy debt burden, diminished external aid flows, and massive poverty. Although it is stated in the CAS that Zambia on average has better access to health, education and water than many of its neighbors, it is somewhat disturbing to realize that since the early 1980s the quality of such social services has declined, poverty has risen, and above all, the country has an extremely high incidence of HIV/AIDS. At over 19%, Zambia has one of the highest incidences of HIV I AIDS in the world. The other key challenges confronting the country, as stated in the CAS, are sound environmental management, improving governance and reforming the public sector. To overcome these challenges, the Government will have to redouble their efforts with close collaboration with the country's development partners, including the Bank. In view of the fact that the country has a high poverty level of 69.2 percent, the government needs to improve its performance substantially in key areas such as health, nutrition and population, This CO(Uffient has a restricted distribution ;md may be used by recipients only in the! r::rf•)rrr::mce of their official duties. Its contents mav not otherwise be disclosed without . ,.,rl-48, h. . - ' · - .u J.rL-:: :J.UL onz:1uon. education, social protection, rural development and agriculture. We noted that the present CAS has been prepared with extensive consultations with the Zambian authorities, with a view to incorporate the long-term vision and development framework of the country. In this regard, the three strategic areas: removing constraints to sustainable, diversified growth; improving governance; and increasing access to basic services and direct poverty intervention, identified in the CAS, are in line with the Government's development agenda, and we found them to be very reasonable and appropriate. We agree with the CAS that Zambia's program continues to be high-risk due to factors such as past legacies in economic reform efforts, a failure to successfully complete the copper privatization, a further fall in copper prices, governance issues, continuing regional instability and the HIV/AIDS epidemic. Nevertheless, we hope that the actions outlined in the CAS, such as HIPC debt relief, implementation of the governance program, and more aggressive HIV/AIDS control programs, will help to minimize the risks. It is encouraging to note that the Government, due to its experience with sector investment programs, coupled with concerns about aid coordination and the lack of a shared, long-term vision, has undertaken preliminary work on a Comprehensive Development Framework (CDF), though it is not a pilot country. This will certainly help in the coordination of the many players involved in reducing poverty in the country. However, in view of the weak institutional capability in the country, the country does not seem to be in a position yet to take the lead. Therefore, the Bank needs to exercise caution in this regard, and should not rush for its implementation. Finally, we endorse the lending scenarios and triggers as proposed in the CAS and wish the Zambian authorities every success.