Announcement of Meeting of the Consultative Group for the Republic of Zambia on June 27, 1985

FOR IMMEDIATE RELEASE 1NTERNATION!U. MONE'l'ART FUN'D World Bank 1818 H Street, N.W ., Washington , D.C. 20433 , U.S.A.• Telephone : (202) 477-1234 JOINT LIBR '.l' 'f JUL ~ 1985 INTERNATIONAL BANK FOR ~ W.COt4S7FlUOT!QN CNP DE'iJETOPMEN'I' . WASHINGTON, D. C. 20431 BANK NEWS RELEASE Contact: Pamela K. Brennan June 27, 1985 (202) 477-3293 MEETING OF THE CONSULTATIVE GROUP FOR THE REPUBLIC OF ZAMBIA The third meeting of the Consultative Group for Zambia was held in Paris, from June 25 to 26, 1985, under the chairmanship of Mr. Jochen Kraske, Director Country Programs, World Bank. Attending the meeting were delegations representing Belgium, Canada, Denmark, Finland, France, the Federal Republic of Germany, Ireland, Italy, Japan, the Netherlands, Norway, Sweden, Switzerland, the United Kingdom, the United States, the African Development Bank, the Commission of the European Economic Communities, the European Investment Bank, the International Fund for Agricultural Development, the International Monetary Fund, the Saudi Fund for Development, and the United Nations Development Programme. Observers from Development ·Assistance Committee/Organization of Economic Cooperation and Development were present. The delegation of Zambia was led by the Honourable Mr. L.J. Mwananshiku, Minister of Finance and of the National Commission for Development Planning, and included the Honourable Gen. G.K. Chinkuli, Minister of Agriculture and Water Development, and the Honourable Mr. L.S. Subulwa, Minister of Commerce and Industry. The Group discussed the current situation and prospects of the Zambian economy, focusing especially on the present financial crisis and the measures needed to restore financial stability and, at the same time, to promote economic recovery and diversification. The meeting noted the sharp deterioration that has occurred in the country's financial situation during the past year and the serious adverse effects this has had on the Government's ability to carry out its stabilization and restructuring programs. It was agreed that successful implementation of these programs would require amongst other backing extraordinary financial support from the donor community in the form of increased assistance and that a significant proportion of that assistance should be on a quick disbursing basis. The importance of reestablishing access to IMF resources was also recognized as being vital to resolving the current financial crisis. The Government's policy and institutional reform program was reviewed. While the members welcomed and supported the reforms discussed at the meeting, more rapid and efficacious implementation of the program was considered necessary in order to bring about the urgently needed adjustments in the economy. In any event, it was the consensus of the meeting that the adjustment process would take the combined efforts of all present over a considerable period of time.  - 2 - The Delegates reviewed the Government's strategy for rehabilitating and diversifying the economy. Strong support was given to the emphasis on agriculture and export promotion, which were · seen as crucial for the country's future economic growth and stability. The importance of involving the private sector more in the development process by improving the incentives for private initiative through greater freedom of action was highlighted and the Delegates welcomed the steps the Zambian authorities had already taken in this regard. The importance of improved implementation of projects was also stressed, since this was seen as critical to effective, and rapid, use of external assistance flows. The members agreed that the Government's strategy is appropriate to bring about the stabilization and recovery required in the economy. It was recognized that this strategy would require careful implementation and monitoring, and the Group agreed that effective aid coordination was essential. The Group reaffirmed last year's conclusion that commitments of about US$450 million per annum would be needed from official sources to assist the country with its adjustment program and agreed to strive to achieve that level of assistance. The need for quick disbursing, non-project assistance was emphasized, as was the requirement that the assistance be provided only for high priority activities. The Delegates indicated their continued support for the Government's program and agreed to convene again in about a years time.