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NEGOTIATIONS to find a sustainable and agreed way for Zimbabwe to fulfil its commitments to clear arrears of debt and future borrowing must succeed to unlock concessionary finance for everything from development to green investment.
President Mnangagwa yesterday made it clear that Zimbabwe would not repudiate its debts, or for that matter sit back and do nothing hoping for some miracle, but rather was actively engaged in the arrears clearance and debt resolution process and was committed to seeing this process through to a successful conclusion.
Zimbabwe, while not wealthy, is almost certainly too developed and too far along the path to its vision of upper-middle income status to be able to benefit from the special debt forgiveness schemes in place for special cases.
But the country does need to see the far more common and usual restructuring of the debt, and a way of avoiding interest accrual, so that the annual debt servicing payments become practical and affordable.
This is a critical part of the process and basically sees an agreement that those whom we owe money will be repaid, and that these payments are possible and therefore can be expected at the agreed dates.
This is a bit like those payment plans that individuals make over school fees, or water payments or other debts that are greater than what they have available right now.
These individual agreements are built on trust, and effectively match an ability to pay with a commitment to pay, and in the meantime normal services are resumed.
This is what Zimbabwe needs at the national level, and the normal service would be the resumption of access to the concessionary international finance, which is now being boosted by the funds set aside for ameliorating the climate change that has already taken place and the extra money needed to allow development and growth to continue, but in those more expensive carbon-neutral ways.
The presence of arrears often blocks new loans, for obvious reasons. But if the debt is restructured then the red warning labels are removed, and new loans can be granted, with care on both sides admittedly to make sure that they create new value and so make it easier to service that debt as well as the payment plan debts.
While United States sanctions have been a severe problem, relations with other Western countries have improved to the level that they can be considered normal and this year there were even cutbacks in the US sanctions against Zimbabwe and the way they were administered.
But the US, while the largest shareholder in international financial institutions, is a long way from being a majority shareholder and so deals are possible and implementable.
So the critical process remains, as it has been since it was launched two years ago after the Second Republic proved it was a serious partner through several years of excellent fiscal discipline, striking that agreement with the former commercial farmers over payment of improvements, and its general businesslike attitude when it came to finance.
Very importantly, the reforms put in place over the last six years have been done because Zimbabweans wanted them and thought they were a good idea to achieve our own goals and own targets.
They were not imposed from without, although in some cases technical advice and support was available, but because Zimbabweans and their Second Republic Government wanted a functioning and growing economy.
The fact that these same reforms also make us more creditworthy and create the sort of resources that are required to service the new loans as well as the restructured debt, is an extra reason for having them, but the impetus was to have a better economy and country regardless of what others thought.
In his address to the 6th High-Level Structured Dialogue Platform Forum: Arrears Clearance and Debt Resolution Process yesterday, President Mnangagwa hit most of the direct and indirect points that have to be addressed.
He stressed Zimbabwe’s determination to continue the fiscal discipline that has been a hallmark of his administration, along with the generally successful fight against corruption.
We are now upgrading our relationship with the International Monetary Fund, a welcome development. Even with the capital shortages, the President noted that Zimbabwe was honouring its deal with the white former commercial farmers, providing at least some money in every Budget so that we can chip away at that debt.
He did not mention, but it is obvious, that if Zimbabwe was plugged into international finance again, we could do what many countries have done with agrarian reform and borrow to pay out the former large landowners.
There are a range of other internal reforms on matters that have little to do with finance, but which produce results that Zimbabweans want as we work on matching law to the Constitution. Even the Private Voluntary Organisations Bill was largely to make sure that those organisations were transparent over their funding, and were not being used by those who wish others ill.
By extending his overview of Zimbabwean progress beyond the strictly financial, The President was exhibiting that openness that has also become a hallmark of his Government.
We do not have much in the way of secrets and the Government prefers to have almost everything out in the open, being debated and refined.
Online Reporter