The G8 Summit finished yesterday. It finished with a flourish about the HIPC
(Highly Indebted Poor Countries) Initiative on debt reduction. The decision was
to more fully implement HIPC, and to extend it for another two years. There was
much self-congratulation amongst G8 members.

As it happens, the decision can now be put to an immediate test; a test of
integrity, a test of the ringing G8 rhetoric. This very Monday, June 14, 2004,
the IMF Board is meeting to consider the case of Zambia. Zambia is in desperate
straits, and it all revolves around the IMF and HIPC.

I shall try to put the situation as simply as possible. But remember: everything
has to be measured against the backdrop of a country where HIV/AIDS has taken,
and continues to take a terrible toll.

In April of this year, the Government of Zambia negotiated its 2004-2007 Poverty
Reduction and Growth Facility (PRGF) with the IMF. This was meant to be the
programme to run the country financially for three years. But it had a
particular premise on which everything was based: if Zambia could meet the
conditions imposed by the IMF, then Zambia would achieve the requirements for
HIPC eligibility by December 31st, 2004, thus reducing foreign debt service
substantially, and freeing up significant resources for the new budget.
Essentially, Zambia had to produce good economic performance for six months and
the IMF would verify that the "HIPC completion point" had been reached. The
entire programme (PRGF) depends on meeting the HIPC targets.

It is impossible to overstate how hard Zambia has been trying to comply with IMF
requirements, including the imposition of a suffocating cap on wages. The
Government truly thought it was meeting those six-month conditions by the
agreed deadline, when the IMF suddenly informed Zambia that it wouldn't be
possible to resolve things by the end of 2004; the evaluation of Zambia's
performance would have to extend into the first quarter of 2005. For the
Government, that would be a disaster. The entire country is wholly fixated on
2004; for the sake of a month (or two) a kingdom is lost.

As a result, something unprecedented has happened. The Minister of Finance and
National Planning, The Honourable Ng'andu P. Magande, has issued a two page
document outlining the issues, acknowledging the overwhelming crisis which the
Government faces, and appealing to the diplomatic and multilateral communities
to intervene with the IMF to get it to behave in a different manner on Monday.

The economy of Zambia is in crisis. The Government has frozen wages in the
public sector, and raised taxes. Incomes are so low that people are barely
surviving. The imposed macroeconomic policy means that the Ministry of Health
can hire no more staff, and fully twenty per cent of the municipal districts
have no doctors and no nurses. It is estimated that there is a shortfall of
10,000 teachers, and there are 9,000 newly-trained teachers who cannot be
hired. Average pupil- teacher ration is approaching 56:1 ... fatally wounding
the quality of education. The damage to the social sectors is staggering.

Why do I choose to issue this statement? Because at the heart of everything lies
HIV/AIDS. The pandemic is methodically and destructively eating away at the
capacity and infrastructure of Zambian society. It cannot be allowed to
continue. The Government urgently wants to confront the pandemic, but it cannot
do so with its financial policy and planning in a straitjacket. The Board of
the IMF must

come to realize that rigid macroeconomic conditionality is putting Zambia at
risk. Observers within the country worry about the potential for social unrest.
Even the Minister of Finance signals the Government's acute anxiety when he
says: "... the Government of the Republic of Zambia has asked the people of
Zambia to see the year 2004 as a period of sacrifice so as to reach the HIP
completion point by December 2004. Thus, Government has taken difficult and
unpopular decisions ... If the prospect of Zambia ...attaining the HIPC
completion point is made impossible at next Monday's IMF Board meeting, then
the credibility of, and public support for, the Government's programme with the
IMF ... will be severely eroded".

I have argued before in cases involving the International Monetary Fund, and I
argue again that it has failed to grasp the demonic force of the human and
economic carnage caused by HIV and AIDS. The poorest sectors of society: the
extended families, the women, the children, the orphans ... they have all made
incredible sacrifices to keep life going in Zambia in the face of wrenching
austerity. I appeal to the IMF Board to introduce the tiny quotient of
flexibility being requested by the government of Zambia. To do otherwise is to
give continued momentum to the pandemic.

There's a bitter irony here. The former Government of Zambia was a Government
that often flouted every injunction of the international community. The present
Government, and the people of Zambia, are falling over backwards, in the face
of incomparable odds, to comply with the demands of the international
community. I have visited Zambia four times in the last eighteen months; I've
met with many segments of society in various parts of the country, with my
colleagues in the UN family, and with the President and members of his cabinet.
This is a Government doing everything in its power to restore economic growth
and social equity.

For heaven's sake, give Zambia some breathing room. Was the G8 serious in its
avowed embrace of HIPC? We'll know on Monday.