Normal ties with creditors expected by early next year

Conrad Mwanawashe Harare Bureau
The government hopes to have achieved complete normalisation of relations with international creditors by the first quarter of next year, a process which Finance and Economic Development Minister Patrick Chinamasa expects to help open floodgates of investment into the country.

Minister Chinamasa made the remarks at a press briefing following the conclusion of the first Review of the International Monetary Fund Staff Monitored Programme (SMP) on Monday.

“Our intention is that by this time next year, we should be entering a new phase of clearing our arrears and opening the floodgates of new development financing from foreign direct investment that will stimulate growth and reduce poverty in our country,” he said.

Minister Chinamasa said Zimbabwe’s intention was to close the “chapter of the SMPs” and move to complete normalisation of relations with the international financial institutions and other global creditors.The government is making token payments to the Bretton Woods Instruments paying about $150,000 monthly towards clearing its $150 million debt.

Minister Chinamasa said it was imperative to build confidence by creating relationships with foreign creditors as well as local lenders and the business community.

Along that principle, he said compensation of white former commercial farmers will also help to instill confidence.

He said although the government currently does not have funds for compensation an agreement can be reached with the farmers.

“What we need is a determination of what we owe the farmers and a commitment from the government that we’re going to pay. We don’t have the money to compensate the farmers now, but we can at least undertake the preliminary steps. We must confront our problems,” he said.

Among other initiatives the government is working on is the modernisation and upgrading of policies. This includes modernising labour laws in line with international best practices.

The government is also investigating options through which it can reduce the wage bill which is taking about 90 percent of revenue.

Minister Chinamasa said the government is currently brainstorming several avenues to help reduce recurrent expenditure.Another major development is aligning laws to the new Constitution and the Attorney General’s Office is currently seized with the matter. Parliament is expected to deal with several bills in line with the development.

Improving the business environment is also part of the modernisation of the government policies. IMF head of delegation Domenico Fanizza noted that the authorities are committed to intensifying their efforts to lay the ground for stronger, more inclusive, and lasting economic growth.

“Their resolve to reengage with the international financial community and to seek its support for the reform process is encouraging,” said Fanizza.

He commended the government for working on balancing the primary fiscal accounts.

Fanizza said the commitment to eliminate the primary fiscal deficit reaffirms Zimbabwe’s intention to further raise capacity to repay international creditors.