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ZIMBABWE will clear its $600 million debt to the African Development Bank (AfDB) by the end of this year after the regional finance body agreed to extend another bailout package to the country, Finance Minister Patrick Chinamasa has said.The move would help the country reduce its loans with foreign lenders and pave way for fresh financing streams to rejuvenate the economy.
This follows an agreement in principle between the two parties that the AfDB will fund Zimbabwe in clearing its arrears with the regional financier.
The regional multilateral institution has also extended a grant of $5 million towards Zimbabwe’s membership of the African Trade Insurance (ATI).
Zimbabwe has pledged to contribute counterpart funds of $5 million, which will enable the country to be a subscriber-shareholder to the ATI.
The country is saddled with close to $10 billion debt, part of which is owed to the World Bank and the International Monetary Fund.
In recent months Zimbabwe has been seeking to expedite arrears clearance with these institutions as a first step to broader re-engagement.
A 12-member AfDB delegation is in the country to discuss Zimbabwe’s strategies to clear its debt arrears to the three multilateral financial institutions.
Minister Chinamasa said the AfDB had made their proposal to fund the country’s arrears clearance with them after being briefed on the government’s proposed strategies to deal with the arrears, and the on-going reforms under the IMF’s Staff Monitored Programme.
“The African Development Bank has set aside some funds to assist Zimbabwe in clearing the arrears. The amount is yet to be determined by their board,” he said.
According to Minister Chinamasa, the AfDB funds will be available for drawdown up to the end of 2016, so Zimbabwe has to expedite the process.
He said Zimbabwe will be looking to clear the AfDB arrears by end of this year.
“And they’ve assured us that those funds, which have been set aside to assist Zimbabwe in clearing its arrears will be available to us up to end of December 2016, otherwise if we don’t utilise them between now and December next year the funds will disappear, and they (AfDB) will need to go to the market again to mobilise new resources, something that would take more time.
“So we must make every effort to ensure that we’re able to utilise those funds by end of December next year. In fact our hope is that if our strategy is accepted we hope that we should clear the arrears to the AfDB by December this year . . . There are also other strategies that we’re going to employ to make sure that this happens by December 2015,” said Minister Chinamasa.
Head of the visiting delegation, AfDB director Sibry Tapsoba confirmed the regional financier has the resources to assist Zimbabwe in this respect.
“We’re here because we want to reassure Zimbabwe of the commitment of the AfDB to continue assisting the country in clearing its arrears. The level of resource we’ll be putting in this operation will be decided after we return from Abidjan, but at this point in time we’ve just reassured the minister that we’ve the available resources to do so,” he said.
Tapsoba said the on-going re-engagement process will help the country attract foreign investment, and give more confidence to the international community that Zimbabwe is ready for business.
Meanwhile, the AfDB has agreed to meet the cost of Zimbabwe engaging a communication expert to spread internationally the positive strides being made by the country. — Harare Bureau/Reuters
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