enter site The African Development Bank (AfDB) will in September convene a debt resolution forum for Zimbabwe, as the southern African country, steeped in debt, is increasingly failing to repay creditors.
here Zimbabwe is in arrears of half a billion to the AfDB, with the total debt being $726 million. The country also owes $926 million to World Bank in arrears and a total debt of $1.3 billion while IMF is owed $124 million.
We have three or so options that we think Zimbabwe can pursue and get out of this debt quagmire
Despite efforts by officials of the southern African nation to raise funds, international lenders are not willing to extend any more money to the country, precipitating a liquidity crisis and a flat lining of economic growth prospects.
Finance and Economic Development minister, Patrick Chinamasa is of the view that the country has made significant strides to resolve its debt, but international lenders remain sceptical.
AfDB estimates that Zimbabwe requires $16 billion to revamp its road, rail, telecommunication and power infrastructure, which has deteriorated over the years.
According to Reuters, AfDB says the planned forum, the second in two years and led by its president, Donald Kaberuka, would consider three ways it could help Zimbabwe clear its huge debts.
The bank says it will settle on a rescue package.
“We have three or so options that we think Zimbabwe can pursue and get out of this debt quagmire,”
Mthuli Ncube, the bank’s chief economist told a news conference on the sidelines of the AfDB annual meeting.
The deal will be disclosed at the forum in three months time.
In 2012, AfDB hosted a debt resolution forum in Tunis, Tunisia for Zimbabwe, where the country’s creditors met to map a strategy.
“President Kaberuka is once again taking the leading role to convene the next Debt Resolution Forum slated for September 2014,” Chinamasa said.
“The forum seeks to move forward and finalise Zimbabwe’s debt resolution process. The innovativeness of the bank in the implementation of ZimFund, now capitalised to the tune of about $125 million, is much appreciated.”Allow me to take this opportunity to invite development partners to scale up their support for ZimFund.”
“In spite of the existing arrears to the bank, our relationship with the bank is satisfactory. Our commitment as a country is to normalise our relations through a comprehensive debt and arrears clearance strategy with all creditors.”
Latest government data showed that Zimbabwe’s total external public and publicly guaranteed debt stood at $6,077 billion as of December 31, 2012. The bulk of the southern African country’s debt dates back more than a decade.
Chinamasa recently said Zimbabwe had entered into a payment plan with creditors.
“We entered into a payment plan with the Bretton Woods institutions and so far we have been fulfilling that. It’s a token payment as you will appreciate,” he said.
AfDB has been making funds available to Zimbabwe indirectly through the African Export-Import Bank and PTA, where it has shareholding.
Meanwhile , outgoing World Bank country manager, Mungai Lenneiye says Zimbabwe does not qualify for debt relief under the Heavily Indebted Poor Countries (HIPC) strategy, because it has capacity for a sustainable economic recovery.
Lenneiye said while Zimbabwe had an unsustainable debt, the fact that it could produce and export meant there is still room for recovery.
Zimbabwe expects to collect $4,12 billion in 2014 in exports, slightly up from $3,8 billion last year.
The International Monetary Fund in January approved a six-month extension of a monitoring programme for Zimbabwe aimed at helping it to clear $10 billion in external debts and give it access to much-needed new international credit.