Govt prioritises food security over arrears clearance
Government is prioritising food security at the expense of the long planned external debt clearance, according to Finance and Economic Development Minister Mthuli Ncube.
Zimbabwe, which is saddled with an external debt of more than US$10 billion, has for the past six or so years, worked on a debt clearance plan.
Authorities always believed, successful resolution of Zimbabwe’s external debt arrears, will send positive signals, reduce perceived country risk premium and unlock affordable credit lines.
In September last year, Minister Mthuli announced that Government would embark on talks to clear its arrears on World Bank and African Development Bank loans totalling almost US$1 billion.
“We need some kind of bridging loan or facility because we don’t have enough resources to be able to clear all the arrears. We need about a $1 billion in terms of the shortfall we need for those two,” Minister Ncube was quoted as saying by Reuters on the sidelines of a World Economic Forum Meeting on Africa in Cape Town.
But yesterday, Minister Ncube yesterday made a U-turn and said Government has had to reprioritise food security now more that pressing ahead debt clearance.
He said the advent of Covid-19 has meant priority is now on food security and the provision of health services.
Mthuli said the choice was to borrow US$1 billion in the middle of Covid-19 and drought to pay off creditors or to feed citizens and give them health.
Mthuli said the choice is obvious as the country needed to borrow to support the productive sector so as to generate more foreign currency in the future.
“But we have the emergency of supporting food demands as well as our health deficit. So that has been the reprioritisation, then arrears clearance then comes second in a sense,” he explained.
He, however, said post Covid-19 and the drought then the country would be ready to explore the arrear clearance plans more seriously.
He said Government is already in conversations with potential funders.
“We do have an arrears clearance plan, but thanks to Covid-19 and drought which have slowed us down a bit in terms of execution, but we have a plan, we just haven’t made a lot of noise about it as other things have been urgent.”-ebusinessweekly.co.zw
