Lima on course – Mangudya

Zimbabwe’s debt clearance strategy with International Financial Institutions (IFIs) is on course ahead of the African Development Bank annual meeting later this month, it has emerged.The country has already settled its arrears with the International Monetary Fund. Zimbabwe expects to clear the AfDB’s US$600 million arrears this month while a plan is already in place to clear the World Bank arrears.

A new IMF loan programme for the country can only be deliberated upon clearing more than US$1 billion in World Bank arrears and the amount owed AfDB.

In 2015, during the annual IMF meetings in Lima, the Bretton Woods institutions accepted Zimbabwe’s strategy to clear the cumulative US$1,8 billion arrears owed to IFIs.

The strategy was meant to clear the arrears using the country’s own resources and bridging finance with the regional and international banks.

The Lima agreement seeks to settle more than US$1 billion in arrears to preferred IFIs to allow the country to access new cheap long term funding from the Bretton Woods Institutions.

Reserve Bank of Zimbabwe Governor, Dr John Mangudya recently told The Sunday Mail that the debt clearing strategy was on course.

He said the AfDB board would meet later this month and the country was already putting its paperwork in order ahead of the indaba. The Central Bank chief said the arrears clearance was still on course with what was agreed in Lima.

“The AfDB meeting is in January 2107. The clearance of arrears is in line with the pari-passu principle agreed to in Lima, Peru,” he said.

The clearance of arrears will ensure that the country moves towards accessing long term capital, which is vital for economic transformation.

Lack of cheaper and long term finance for industry to retool or boost production, coupled with illegal economic sanctions, have made it difficult for the country to compete economically on the international market.

Retooling will improve manufacturing efficiency and reduce production costs.

The arrears clearance will also improve the country’s credit rating.