adminresolution strategy in a bid to unlock external financing for economic development. The plan called Zimbabwe Accelerated Arrears Clearance, Debt and Development Strategy seeks ways to retire the country’s debt overhang.
“The adoption of ZAADDS is a bold stride in the amicable resolution of the country’s debt burden,” said Dr Gono. “This notwithstanding there is need to expedite the implementation of ZAADDS to unlock credit lines critical for rejuvenation of the economy.”
Zimbabwe owes various regional and international financiers an excess of US$10,4 billion and this resulted in several institutions cutting financial aid to Zimbabwe.
However, there is renewed interest from some multilateral institutions which have already expressed willingness to start availing credit to Zimbabwe.
Last month, World Bank country manager Mr Mungai Lenneiye hailed Zimbabwe’s new strategy to retire its foreign debt, hinting that the Bretton Woods institution might reconsider extending credit to Zimbabwe.
He said the new debt strategy that the Government had put in place to offset its foreign obligation “sounded reasonable” and this could pave the way for the World Bank to resume providing financial aid to Zimbabwe.“We think what that Minister of Finance (Tendai Biti) has so far put in place in terms of debt repayment sounds reasonable,” said Mr Lenneiye.
“We think in the new year (next year) the process of lending could begin.”
Dr Gono said the central bank was waiting for the outcome of the recent engagements with the International Monetary Fund of the possibility of a staff monitored programme.
“The resolution of debt under ZAADDS, the adoption of an SMP and sustained macro-economic stability would allow offshore financiers to fund medium- to long-term projects, particularly to export sectors.
“This will result in increased foreign exchange inflows into the country, thereby improving the country’s balance of payments position and accelerated economic recovery.”
The new strategy is a combination of old debt relief mechanisms, injection of capital by development partners, leveraging of natural resources and the removal of illegal sanctions imposed by Western countries.
It involves stricter debt management through a debt management office, creation of database validation and reconciliation with all creditors, negotiating arrears’ clearance and a relief plan. It will also include re-engagement with the international community for normalisation of relations, removal of sanctions and leveraging resources.
Unveiling the new debt plan in March, Minister Biti said Zimbabwe could not deal with infrastructural challenges without funding and assistance from international financial institutions and bilateral partners Zimbabwe’s huge debt liability is largely a result of the country’s economic instability over the decade to 2008, which constrained its capacity to repay.
Last year, the African Development Bank said the country’s debt overhang was a major stumbling block to Government’s efforts to attract foreign investment.
Some of the institutions owed by Zimbabwe are the African Development Bank (US$529 million), World Bank (US$1,5 billion), the International Monetary Fund (US$550 million) and the European Investment Bank (US$221 million), among others.
Online Reporter