The International Monetary Fund (IMF) has approved $317m (£216.4m) financing for Zambia's 2002 economic plan to target poverty reduction.

"The gesture by the IMF is tremendous testimony to its shift in addressing poverty in least developed countries," Finance Minister Emmanuel Kasonde said adding $62m would be released immediately.

Zambia has declared the country's food shortage a national disaster, saying four million people face starvation.

It also faces an economic crisis with mining giant Anglo American negotiating to pull out of the Konkola copper mines - the country's biggest mining operation and major employer - which accounts for 67% of foreign currency earnings.

Debt relief

Mr Kasonde said in a statement $150m would be interim financing for the World Bank's Highly Indebted Poor Countries (HIPC) programme, while $167m would be loans to support the budget.

HIPC

The stated aim is to bring a "country's debt burden to sustainable levels, subject to satisfactory policy performance... to ensure that adjustment and reform efforts are not put at risk by continued high debt and debt service burdens."

Last week, Zambia renewed its efforts to privatise the troubled Zambia National Commercial Bank (Zanaco), a key requirement to gain full debt relief under HIPC.

For lenders to Zambia to write-off half of its $7.3bn (£5bn) debt, the government must show sustained economic restructuring for 12 months by the December 2003 deadline.

"Government will diligently observe the 2002 budget targets and maintain an appropriate tight monetary policy to achieve the inflation target," Mr Kasonde said, adding the IMF had also endorsed Zambia's so-called Poverty Reduction Strategy Paper (PRSP).

The United States government has also given Zambia food aid of about $2.3m to help avert the hunger crisis in this Southern African country, the state-run Times of Zambia reported.