AfDB approves Zimbabwe 'debt relief' grant

Published: 11 October 2013

The African Development Bank (AfDB) has approved a grant earmarked to capacitate Zimbabwe to undertake a debt sustainability analysis and to formulate a roadmap to accessing funds under the Heavily Indebted Poor Countries (HIPC) facility.

The regional institution yesterday said the loan will also help the debt-ridden country "to build national capacity to design, update and implement strategy, construct poverty reduction plans, and carry out portfolio-review analysis and for debt sustainability analysis".

Among other things, the loan will be used to help the country design detailed scenarios for external debt arrears clearance and debt relief including restructuring taking into account hypothetical traditional debt relief assumptions, reviewing and undertaking macroeconomic forecasts.

"The exercise will also assist in identifying any gaps in the macroeconomic, external and domestic debt database and seek ways of filling them and prepare a report on the assessment of HIPC Initiative Eligibility and to senior policy makers," said AfDB.

This comes as Finance minister Patrick Chinamasa recently said the country will stick to an International Monetary Fund (IMF) monitoring programme that could pave way for the country to clear its debts, as the economy grapples with chronic power cuts and a crippled manufacturing sector.

"We are committed to the programme," Chinamasa said.

Zimbabwe is still emerging from a decade of economic decline and hyperinflation, but the economy is stuttering in the aftermath of a disputed election in July that has extended President Robert Mugabe's 33-year rule.

The country began an International Monetary Fund-led Staff-Monitored Programme in June which, if successful, could help it clear $10 billion in external debts and give it access to new credit from international lenders.

Under the programme, which is set to run until December, it is expected to implement a raft of economic reforms.

Last year, Zimbabwe adopted the Accelerated Re-engagement Economic Programme (Zarep) which will support sustainable and inclusive economic growth.

Zarep will also assist the southern African nation in building a track record of sound macro-economic policies through a Staff-Monitored Program (SMP) of the IMF, which was approved in 2013.

The economic re-engagement programme built on the significant efforts by the Zimbabwean Government to carry forward its fiscal, monetary, balance of payments and financial and structural reform agenda.

This was Zimbabwe's first IMF consultation agreement in more than a decade.
- dailynews