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Under debt and economic liberalization conditions, gains made after independence have slowed down or reversed. There has been a decline in the quality of life: Infant, Child, and Maternal Mortality worsened — indicators of an uncertain future for many people.
Life expectancy declined from 54 years in 1990, to 40.5 years in the year 2000, with 41 years for females and 39.9 years for males. The combination of impact on Zambia's people has led to a decline in Zambia’s UNDP Human Development Index. Zambia ranked No. 166 out of 177 countries, in the year 2005.
The consequences of further restrictions on government expenditures, particularly in the social and economic sectors as opposed to debt servicing, reveals a depressing picture.
Zambia’s Debt Service ratio has been high, with figures going to 25 percent of export earnings paid as annual debt repayment in the 1990s. This high debt service constrained social and economic spending especially in education and health. Servicing the 1985 total debts amounted to 86 percent of all export earnings and left only 14 percent to be shared among the mining, manufacturing, and farming sectors. Little was made available for the social sectors of health, education, and child welfare.
In 1995, total debt service was $1,584 million while total expenditures on social service delivery (that is Education, Health and Social Security combined) were $163 million.
This historic grip of IFIs and poor economic performance described above has had a telling effect on social welfare for the average Zambian. According to the Living Conditions Monitoring Survey of 2004, 68 percent of the population is below the national poverty line, earning less than K111,747 (about US$30) per month, translating to around a dollar per day. This is in spite of the implementation of the PRSP and the positive growth trends during the last few years.
How has debt cancellation benefited Zambia?
Some immediate benefits were definitely related to irrevocable debt Relief which totaled $3.8 billion under HIPC and over $2,090 million under the MDRI.
Consequently, annual debt service was to fall below $150 million per year at least up to 2020. The country will be saving annually about $180 million or K500 billion in debt service. This year (2007), foreign debt service will be $33.9 million against the pre-HIPC and pre-MDRI figure of $373.2 million in 2004.
The amount of $33.9 million (K129.3billion) is 1.1 percent of the budget and when compared to K378 billion or 3.7 percent of the budget in 2006 is set aside for payment of external debt. These savings arising from the debt relief under both the HIPC Initiative and MDRI are expected to assist the country in its development efforts so as to reduce the current levels of poverty by 50 percent by 2015.