Zimbabwe to seek debt relief

Zimbabwe to seek debt relief
Published: 23 January 2014
ZIMBABWE will this year actively lobby creditors to have its $6,1 billion debt written off after completing an audit and validation of the debt last year, Finance and Economic Development Minister Patrick Chinamasa has said.

The audit and validation exercise established that Zimbabwe's debt was $6,1 billion contrary to initial International Monetary Fund estimates of $11 billion.

Minister Chinamasa said the country would seek debt relief and also lobby for fresh funding assistance to rebuild its capacity to meet its obligations.

"We will re-engage the auditors for debt relief.

"We are looking at a number of ways of finding innovative debt relief. AfDB agreed to look at that while helping us with some funding, although this is still in small way," he said.

He said Government will continue asking the multilateral creditors to give it additional funding to rebuild capacity to meet obligations as lack of resources means the country cannot make any meaningful progress.

Head of Zimbabwe Aid and Debt Management office in the Ministry of Finance and Economic Development, Mr Andrew Bvumbe said the ministry will this year actively seek ways to resolve the country's debt issue.

He said the country had engaged each of the creditors and assessed each loan, interest accrued and the penalty to validate the country's real indebtedness, which put the country's total liabilities at $6,1 billion.

"We have looked at the highly indebted poor countries initiative and we will look at other alternative ways outside the HIPC initiative," Mr Bvumbe said.

According to the debt audit and validated debt, $4,443 billion of the country's total debt to bilateral and multilateral creditors is in arrears and most of it to top five Paris Club members Germany, France, Japan, UK and US.

The Paris Club is owed $3,017 billion, non-Paris Club $572 million, AfDB $636 million, World Bank 1,348 billion, IMF $125 million,European Investment Bank $302 million and others $75 million.

The validated debt profile pertains to public and publicly guaranteed debt and excludes private sector and Reserve Bank of Zimbabwe debt.

Resolution of Zimbabwe's debt is key to normalising relations with the international financial institutions and the bilateral creditors. The debt has become a serious impediment to the country's developmental agenda.

Minister Chinamasa recently said continued accumulation of external debt payment arrears was seriously undermining the country's creditworthiness, and severely compromising its ability to secure new financing.

In this regard, Government in November 2010 approved the Zimbabwe Accelerated Arrears Clearance Debt and Development Strategy to pave way for negotiating the clearance of arrears and debt relief for the country.
- herald


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