ZAMBIA
                                  CHAIRMAN'S SUMMING UP

   Poverty Reduction Strategy Paper Annual Progress Report and IDA-IMF' Staff  Joint
                                              Assessment

                         Meetingof Board of Executive Directorsof IDA
                                            June 15,2004

        The Executive  Directors
                               discussed
                                       the               first Annual
                                                                    Progress
                                                                          Report
                                                                               on
                                                                                the
implementation of the Poverty Reduction Strategy Paper (PRSP) preparedby the Government of
Zambia,and the JointStaffAssessment(JSA) of thePRSPProgressReportprepared                   by the
staffs of the IMF and IDA.

        Directors.welcomedthereportcommendingtheGovernmentonthecountry'srecent
growth performance, and welcomed the progress made towards achieving educational outcomes,
nutritional results, sanitation, and the fight against major epidemic diseases, especially malaria
andHIV/AIDS,whilecautioningthatmoreprogressneeds                  to be madeinimplementingthe
PRSP. Directors also encouraged the authorities to continue the participatory approach.in this
regard.

        DirectorswelcomedtheGovernment'scontinuedefforts              to improvetheinstitutional
arrangements to deliver public services, combatcorruption,andincreasetheefficiencyand
transparency of thepublicexpenditureandfinancialaccountabilitysystems.Theynotedin
particular, the negative impact of fiscal slippagesandextra-budgetaryexpendituresonthe
availability of public resources towards poverty reduction expenditure programs. Directors noted
the need to put in place an effective monitoringandevaluationsystem              to monitorPRSP
implementationprogress. They noted that the country has taken several steps to improve public
managementsuchasMediumTermExpenditureFramework(MTEF)andActivityBased
Budgeting (ABB). Directors urged the Government to deepen public sector reforms in order to
enhance fiscal management capacity andto ensure efficient and moreeffectiveuse of budgetary
resources. The need to accelerateprivate sector development was also mentioned.

        While Directors were encouragedby the results in agriculture whichhas led to improved
food security, they stressed the vulnerability of this sector to various shocks including droughts
and price fluctuations. Directors concurred with staff that a lot .remains to be done to improve
infrastructure facilities in themaintourismareasand           to promotemining.SomeDirectors
encouraged the Bank to develop innovative mechanisms to address infrastructure financing in
cooperationwithIFCandMIGA.Theimportance                      of financial sector reform was also
emphasized.

        Some Directors asked the Bank to ensure a prompt review for HIPC completion point,
along with thesuccessfulimplementation of the PRSP.

        Finally, Directors concurred with the staff that the PRSP continuesto provide a credible
poverty reduction frameworkfor continued IDA concessional assistance to Zambia.