malvernmugadzikwa
Tapiwanashe Mangwiro
Analysts have been impressed by the government’s economic diplomacy with regards to the debt clearance strategy saying it is critical for sustainable development.
This comes after the African Development Bank (AfDB) president, Dr Akinumwi Adesina, who is a High Level Facilitator for the Arrears Clearance and Debt Resolution Process, landed in the country yesterday to attend the Second Structured Dialogue Platform set for today.
He will join his counterpart, the former Mozambican President Joaquim Chissano, the other facilitator, who landed in the country on Sunday evening.
Dr Adesina in July 2022, accepted President Emmerson Mnangagwa’s call to champion Zimbabwe’s debt clearance roadmap in order for the country to access new money from thw international financial institutions (IFIs).
This week, fiscal authorities will hold a high level engagement with independent emissaries chosen by the government to spearhead the arrears clearance plan, which economic analysts believe is the right call.
“The country’s debt is currently unsustainable for any meaningful development to take place hence it is critical that the government has undertaken to extinguish all the country’s debts,” said Batanai Matsika, an Investment Analyst.
“We are very delighted with the progress, the government is working towards clearing the country’s debts to open up the economy for more investment options,” said Persistence Gwanyanya an Economist.
According to Treasury, total external debt, as at end September 2022 is estimated at US$14,04 billion, including US$5,7 billion of bilateral debt which is 41 percent of the amount, US$2,6 billion of multilateral debt which is 18,4 percent of the amount.
RBZ debt which represents 24 percent of external debt is US$3,4 billion, and US$2,3 billion is of blocked funds constituting 16,6 percent. Of the total bilateral external debt of US$5,7 billion, Paris Club debt amounts to US$3,6 billion, while US$2,2 billion is owed to Non-Paris Club creditors.
“The external debt overhang continues to weigh down heavily on the country’s development efforts, as access to external financing remains very limited due to the accumulation of external debt arrears,” Minister of Finance and Economic Development Mthuli Ncube told Parliament in November last year.
Of the total external debt of US$8,3 billion excluding RBZ debt and blocked funds, principal and interest arrears and penalties represent 76 percent or US$6,3 billion.
Over the past five years, the country’s development journey has been funded largely by domestic capital, hence extinguishing debts will broaden Zimbabwe’s working capital base.
Bongani Ndlovu