Consultations on debt clearance begin
Consultations on reforms of arrears clearance and debt relief to be led by African Development Bank (AfDB) President, Dr Adesina Akinwumi, have started, according to Finance and Economic Development Ministry.
In this humongous task, Dr Adesina is being assisted by former Mozambican President Cde Joachim Chissano.
Two sub-committees have been created that is – the Economic Growth and Stability Sector Working Group (SWG) and the Governance SWG.
These committees, according to the ministry will feed into the High Level Structured Dialogue meetings on ways to clear debt owed to various international organisations by the country including Paris and Non-Paris Club members.
The technical committee includes representatives from Government, civil society, donors, business community and is co-chaired by World Bank and International Monetary Fund (IMF) representatives.
Head of debt management in the Ministry of Finance and Economic Development, Andrew Bvumbe, confirmed the developments that the process has begun and at the end of the month, proposals will be put forward before Dr Adesina.
“Yes, there was an inaugural meeting of the Economic Growth and Stability Sector Working group and the other SWG is on Governance,” Bvumbe said.
Bvumbe said, it was agreed at the Inaugural Structured Dialogue Platform meeting on December, 1, 2022 that these two SWGs will feed into the High Level Structured Dialogue meetings by producing matrices of reforms to be implemented as key elements of the arrears clearance and debt relief process being championed by the AfDB boss.
“The two SWGs have started the process of consultations on these reforms. The members are drawn from Government, creditors, development partners, private sector and civil society organisations.
“The Governance SWG will have its inaugural meeting next week and the outcomes of these two meetings will be presented to the High Level Structured Dialogue platform meeting slated for the end of this month.”
Dr Adesina in July 2022, accepted President Emmerson Mnangagwa’s call to champion Zimbabwe’s debt clearance roadmap in order for the country to access new money from international financial institutions (IFIs).
The AfDB boss then held inaugural meetings with developmental partners and the private sector in order to grasp the full picture of the situation at the time.
President Mnangagwa had a private meeting with Dr Adesina’s team on the sidelines of the the Organisation of African, Caribbean and Pacific States (OACPS) in Angola late last year before he went to America for the USA/Africa Summit where he (Dr Adesina) presented Zimbabwe’s case.
“And also then, of course, on the sidelines we discussed with (Dr Akinwumi) Adesina’s team. We appointed Adesina — the President of AfDB (African Development Bank) — as our champion of rescheduling our debt with the Paris Club. He is being assisted by former President (Joachim) Chissano. We drew up a framework on such discussions, on how the matter is going to continue,” said President Mnangagwa.
According to Treasury, total external debt, as at end September 2022 is estimated at US$14,04 billion, including US$5,7 billion of bilateral debt which is 41 percent of the amount, US$2,6 billion of multilateral debt, which is 18,4 percent of the amount.
RBZ debt which represents 24 percent of external debt is US$3,4 billion and US$2,3 billion is of blocked funds constituting 16,6 percent. Of the total bilateral external debt of US$5,7 billion, Paris Club debt amounts to US$3,6 billion, while US$2,2 billion is owed to Non-Paris Club creditors.
“The external debt overhang continues to weigh down heavily on the country’s development efforts, as access to external financing remains very limited due to the accumulation of external debt arrears,” Minister of Finance and Economic Development Prof. Mthuli Ncube told Parliament in November last year.
Of the total external debt of US$8,3 billion excluding RBZ debt and blocked funds, principal and interest arrears and penalties represent 76 percent or US$6,3 billion.
Mthuli added that: “The bulk of the external debt stock is made up of principal arrears of US$2,7 billion, interest arrears of US$1,6 billion and penalties of US$2,1 billion, while the debt outstanding and disbursed accounts for US$2,03 billion.”
Zimbabwe has been making token payments to all its foreign financiers it owes among them the Paris Club, which has 17 members, the World bank and the African Development Bank (AfDB).
Mthuli in July 2022 said: “We are making token payments to the 17 members of the Paris Club, this means that we are now servicing all our creditors, and payments are being made quarterly for the past 12 months.”
According to the AfDB, Zimbabwe has continued to make token payments of about US$700 000 each quarter to service some of the outstanding debt to the World Bank and others.
“As part of the re-engagement process, government is making quarterly token payments of US$3,2 million to the IFIs and the 16 Paris Club creditors.
“To date, cumulative token payments to the World Bank amount to US$67 million, US$35,4 million to the African Development Bank Group and US$4,4 million to the European Investment Bank. Cumulative token payments to the 16 Paris Club Creditors amount to US$8 million,” Minister Ncube told Parliament in November last year.-ebusinessweekly
