This Joint Staff Advisory Note (JSAN) focuses on the Second Annual Progress Report for Zambia’s Poverty Reduction Strategy Paper (PRSP). The government’s strategy to reduce poverty focuses on promoting economic growth through macroeconomic stabilization and diversification and improving the quality of service delivery, while addressing crosscutting issues of governance, HIV/AIDS, gender, and the environment. The JSAN provides IMF staff advice on priorities for advancing the PRSP implementation. It highlights progress in implementing the PRSP and provides suggestions for strengthening its implementation. The risks associated with implementation are also described.

This paper presents the Joint Staff Assessment of Zambia's Poverty Reduction Strategy Paper (PRSP) Progress Report. The report concludes that the implementation of the PRSP has been weaker than intended because of the extreme pressures placed on the budget by extrabudgetary expenditures, which reduced the funding available to PRSP programs and activities. The report also acknowledge that Zambia's economic program supported by the IMF's Poverty Reduction and Growth Facility arrangement has been off track since April 2003 owing to fiscal slippages, in particular salary and wage overrun, which led to high domestic borrowing.

Technical assistance is one of the key services provided by the IMF to member countries—particularly lower income countries. It covers a wide set of activities, from technical assistance to support IMF policy advice to longer-term assistance to support countries’ institutional development. This evaluation report examines the relevance and effectiveness of IMF technical assistance, and derives recommendations for both IMF management and the Executive Board.

This paper examines Zambia’s Second Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility (PRGF) and a Request for Waiver and Modification of Performance Criteria (PC). Performance under the PRGF-supported program has been good, although there were delays in some structural measures. All but one of the PCs and all benchmarks under the quantitative program for December 2004 were observed. Two structural PCs were observed, and the third one, for end-February 2005, is now a prior action for the completion of the second review.