Govt moves another step to settle external debt

Business
BY NDAMU SANDUOFFICIALS from the International Monetary Fund (IMF) and the World Bank will visit the country next month for crucial talks in Zimbabwe’s first step towards clearing its US$9,1 billion external debt.

The visit comes after two crucial meetings in Tunisia and Washington DC, where consensus was built among all creditors and other stakeholders over the process of resolving the country’s external debt.

 

Finance minister, Tendai Biti, said on Thursday the resolution of the debt question would unlock fresh capital into the country needed to drive economic growth.

Biti said he had briefed President Robert Mugabe on the debt question and was given the nod to re-engage the country’s creditors.

This has resulted in negotiations with the IMF and World Bank — a framework for accelerated engagement next month.

“If we reach this agreement, it will pave the way for donors to help us with our US$9,1 billion, either through cancellation or forgiveness. We need to deal with the arrears because these are a precondition for us to access the huge amounts that are at the World Bank and IMF,” Biti said.

Zimbabwe’s arrears to the World Bank are US$507 million, US$140 million to IMF and US$409 million to the African Development Bank (AfDB)

Biti said Zimbabwe had moved mountains for the donors to come to the decisions reached in Tunisia and in Washington DC and Zimbabweans have to speak with one voice for the debt question to be addressed.

Zimbabwe’s external debt had been termed unsustainable up to 2029 by a consultant hired by government three years ago.

The principals in the inclusive government approved the Zimbabwe Accelerated Arrears Clearance, Debt and Development Strategy (ZAADDS) in March after months of haggling, as one faction of the inclusive government was arguing the country was too rich to be declared a poor country.

ZAADDS uses a combination of debt relief and resources pledging to clear the country’s debt.

The programme was then presented at a High Level Debt Forum in Tunisia in March.

Another meeting was held on the sidelines of the IMF/World Bank Spring meetings in Washington DC last month.

IMF and the World Bank are considered the international “Commissioner of Oaths” and once they agree on anything, Zimbabwe’s other creditors would follow suit.

 

‘Clearing debt critical for rehabilitation’

Biti said once the debt question was settled, the country could tap into the huge amounts from the Bretton Woods institutions to address the infrastructure deficit in the country.

AfDB estimates that Zimbabwe needs US$16 billion for infrastructure rehabilitation.

“You will not get that money from the private institutions, but from the IFIs (international financial institutions), the IMF, World Bank and African Development Bank, so it’s important that we deal with the issue of arrears,” he said.