Zambia may have find an extra $100m to service its foreign debt this year, putting an "intolerable" burden on the country's economy, according to the country's president.

IMF is demand Zanaco be sold

"The debt is what is going to undermine our development efforts, the debt burden is now intolerable," President Levy Mwanawasa warned in his New Year's address.

The sub-Saharan African country, one of the poorest in the world, is saddled with $6bn of external debt.

The warning comes after the International Monetary Fund said Zambia will not receive about $1bn in debt relief under the Highly Indebted Poor Countries (HIPC) initiative if it does not follow an agreed privatisation programme.

"Something has to be done"

Most of Zambia's 11 million people live on less than $1 a day, and about a quarter face famine because of a regional food shortage.

"Each year we have to find an excess of $200m just to service the debt. This year the figure may exceed $300m, something has to be done," Mr Mwanawasa said.

He has warned that Zambia might suspend privatisation programmes, saying they cause hefty job losses while bringing few benefits to rural areas.

Under HIPC, the sell-off of the state Zambia National Commercial Bank (Zanaco), along with power utility Zesco and telecoms firm Zamtel, are key to qualifying for the debt relief.

Anti-poverty campaigners have suggested that HIPC countries suspend all debt servicing and payments, and use the money instead to feed their populations and provide health care.