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.

The Joint Staff Advisory Note discusses the progress in implementing the Poverty Reduction Strategy Paper (PRSP) for Zambia. The government has officially launched its second PRSP, known as the Fifth National Development Plan (FNDP) for 2006-10. The FNDP builds on the achievements of the first PRSP, for example, strong improvements in macroeconomic performance and progress in public expenditure management. FNDP has strengthened its focus on key issues, emphasizes achieving tangible results, and includes appropriate monitoring and evaluation arrangements.

This paper discusses implementation of the Fifth National Development Plan (FNDP) in Zambia. The planning process of the FNDP integrated views from the Provincial and District Development Plans approved by the respective provincial and district level organs. The FNDP’s goals are multipronged. The government recognizes that wealth creation through sustained economic growth constitutes the most important element in poverty reduction and, consequently, a high premium is being placed on growth-stimulating interventions. The government also recognizes that redistributive policies do matter for reducing poverty and that growth and equity are not necessarily in conflict.

This paper reviews Zambia's First Poverty Reduction Strategy Paper (PRSP) Implementation Progress Report covering January 2002-June 2003. The report describes the first one and half years of the implementation of the PRSP in four strategic areas, namely economic and social sectors, governance, infrastructure, and crosscutting issues. It covers the macroeconomic performance-budget and structural reforms with regard to the PRSP refined indicators. The report focuses on the progress made in undertaking structural reforms to support the policy and institutional changes required to effectively implement the PRSP.