‘Debt resolution strategy is key to access new financing’
Finance and Economic Development Minister, Professor Mthuli Ncube has said the
implementation of an Arrears Clearance, Debt Relief and Debt Restructuring Strategy is
the only path for the country to access new external financing required for post Covid-19
recovery and achieving the economic development agenda.
Zimbabwe, according to the Arrears Clearance, Debt Relief and Debt Restructuring
Strategy document is ready and geared for private sector-led inclusive economic growth.
It said the arrears clearance and eventual access to new financing will provide
momentum for economic reforms and private sector investment for the country to attain
Vision 2030 goals.
In a comprehensive strategic document, Minister Ncube said for the arrears
restructuring strategy to succeed, the country will need strategic partners and
champions among the international community.
“The need for strong, broad and comprehensive re-engagement with development
partners cannot be over-emphasised.
“For the Arrears Clearance, Debt Relief and Restructuring Strategy to succeed, Zimbabwe
will need strategic partners and champions among the international community,” reads
part of the document.
healthcare
Minister Ncube said the country’s post Covid-19 pandemic recovery requires access to
new resources to invest in healthcare, education, key infrastructure, climate change
adaptation and mitigation, safety nets and social protection.
“The Covid-19 pandemic has not spared any nation and has had devastating impacts on
Zimbabwe, worsening the position of an already debt distressed economy. Zimbabwe,
therefore, needs to also benefit from the global efforts and measures that are aimed at
bringing debt relief and availing resources to mitigate the impact of Covid-19 pandemic
to low-income countries.”
According to the document, the urgent conclusion of a debt resolution strategy is critical
in regaining access to concessional financing from both multilateral and bilateral
development partners.
The clearance of the arrears to the International Financial Institutions (IFIs) and Paris
Club requires a comprehensive, well-coordinated approach, including strong support
from all creditors, it said.
In a show of commitment to clear the debt and in line with the Government’s reengagement commitment, token payments to the International Financial Institutions amounting to US$1,6 million per quarter, were resumed in March 2021.
Token payments amounting to US$100 000 per quarter are being made to each of the 16
Paris Club bilateral creditor beginning in September 2021 – a total of US$1,6 million per
quarter.
“Arrears remain a major challenge to the economy, making up over 77 percent of total
external debt. Almost all external debt owed to multilateral development financial
institutions (MDBs) is now in arrears, (World Bank Group, US$1,4 billion or 88 per cent,
African Development Bank, US$681 million or 95 percent and European Investment
Bank, US$344 million or 95 per cent).”
The external debt overhang is weighing down heavily on the country’s development
needs and will continue to negatively impact on the country’s ability to meet the SDGs
targets, especially in health, education, social protection and bring down the levels of
extreme poverty.
“The lack of access to international financial resources to finance Zimbabwe’s economic
recovery from the Covid-19 pandemic and NDS1 priority projects and programmes will
continue to affect the country’s capacity to achieve its inclusive economic development
goals, especially infrastructure investments, and climate change mitigation and
resilience.
European Investment Bank
“The continuing accumulation of arrears is also seriously undermining the country’s
credit rating and is severely compromising the country’s ability to attract foreign direct
investment, as well as to mobilise direct budget and balance of payments support.
“ Zimbabwe is also currently losing out on opportunities to access concessional facilities
from the International Financial Institutions (IFIs) such as the World Bank’s IDA, AfDB’s
ADF and IMF’s Extended Credit Facility (ECF),” the report further says.-The Chronicle
