BULAWAYO - Zimbabwe has no capacity to clear debt arrears with international financiers due to the poor state of the economy, Finance minister Patrick Chinamasa has said.
Chinamasa told journalists at a press briefing in Bulawayo last week that government was engaging the institutions to find ways of servicing the debt.
“Currently, I have got no capacity to pay the arrears or the principal debt which by the way now stands at $6,4 billion.
“This is excluding the Reserve Bank debt which comes to $1,35 billion. We are more or less $7 or $8 billion in arrears if we take all the debts into account,” he said.
The Finance minister said as the situation stands, engaging creditors was the only way towards a sustainable debt relief.
Chinamasa indicated that it has been made clear to him that Zimbabwe does not qualify for debt relief or other credit lines as long as the arrears remained unpaid.
“We are a member of the International Monetary Fund (IMF) and all the Bretton-Woods institutions. There are benefits we accrue by virtue of being a member but the Bretton-Woods institutions are saying you cannot borrow any money, you cannot enjoy any benefits until you clear your arrears,” he said.
Chinamasa added IMF officials questioned him on how Zimbabwe was going to find its way out of the deep debt burden and what was government’s policy on it.
“We told them that the mining sector has a potential to generate revenues cash flows to be able to service the debt,” he said adding that the government will be soon making amendments to the Mines and Minerals Act to create the necessary policy templates on positive investment in the sector.
As part of the plan, the minister also assured IMF that the Zimbabwean government will reform the banking sector as well as increase transparency and greater accountability in the diamond mining sector.
To ensure the laid out plan is achieved, the IMF has created a staff monitored programme on Zimbabwe.
Chinamasa noted that each time he visits the United States, he will be trying to find ways to clear the huge debt, but said government had no capacity to do so due to the poor state of the economy.
“I have noted that there is a misconception about the relationship with IMF to the extent that each time I return from Washington, the media asks what I have brought back from IMF.
“I think that statement comes from a gross misconception of our current relationship with the IMF,” Chinamasa said.
Flanked by Information and Broadcasting Services minister Jonathan Moyo and his deputy Samuel Undenge, Chinamasa said the current relations with the IMF were that of creditor and a debtor.
“The Bretton-Woods institutions which include the World Bank, ADB, IMF IFC, working in unison take their cue from IMF. There is nothing you can do with these unless it has been sanctioned by the IMF,” Chinamasa said.
He said he had made it clear to IMF that the huge debt arose after the country implemented the agrarian reform which many Western countries opposed over the manner in which it was carried out.
“Because of sanctions that is when we started failing to pay our arrears. We started failing to honour our international obligations.
As far as the IMF is concerned, they say it is because of poor policies but we dispute that because the land reform has come at a heavy cost,” he said.
Chinamasa whose national budget received criticism from economic analysts, said government had no capacity to clear its IMF arrears.