Zim does not qualify for debt relief: IMF

HARARE - Zimbabwe is not poor enough to deserve financial bailout under the Highly Indebted Poor Country (HIPC) facility, the International Monetary Fund (IMF) has said.

Domenico Fanizza, the lender’s representative to Zimbabwe, said the southern African nation has “a lot of potential” and did not qualify for “destitute bailout money”.

“…it is (Zimbabwe) not even poor, it is merely a policy and management issue,” he told delegates at a breakfast meeting in Harare yesterday.

“Zimbabwe owes IMF $142 million and cannot benefit from the institution’s financial support because of these arrears. The country does not qualify for debt relief under Highly Indebted Poor Countries (HIPC) arrangement,” Fanizza said.

He said the IMF’s regulations stipulate that it cannot offer financial support to a country that owes other international financiers.

“Financial support is key to unlocking the potential,” Fanizza said.

“However, the country needs to work hard to change external perceptions and get this development assistance.”

According to economic experts, a country that qualifies for HIPC status is one whose debts are more than one-and-a-half times its exports.

It must also be on a World Bank or IMF programme for at least three years to qualify.

Speaking at the same occasion, Finance minister Patrick Chinamasa said the country, saddled by a $10 billion debt, could take another route through working on debt rescheduling so that it gets access to new funding.

He said Zimbabwe must be grateful that the IMF had ruled out the HIPC route.

“We should be happy the IMF says we do not qualify for HIPC,” Chinamasa said. “What this simply means is that although psychologically we have convinced ourselves we are dying, we are not dying at all.”

To receive HIPC debt relief, Zimbabwe would need to qualify for the initiative, and qualification largely depends on Zimbabwe’s levels of debt vis-à-vis exports based on the latest fiscal year data and on its policy performance.

Chinamasa concurred with Fanizza and said the Bretton Woods Institutions acted in one accord and the country had to work hard at mending relations.

“The Bretton Woods Institutions are a little mafia,” he said. “They take the same position on any issue, which is why we are working on normalising relations. If we do not do this we cannot access capital markets and this is fatal for us as a country.”

However, the Treasury chief questioned why the International Finance Corporation (IFC), a division of the IMF, was not supporting Zimbabwe’s private sector

“Zimbabwe’s private sector owes IMF about $1,9 billion and is servicing its debt, so l don’t understand why IFC is not supporting them,” he said.

“I have come to the conclusion that they are not supporting them as a punitive measure.”

Chinamasa added that Zimbabwe had the potential to pay its debt if it “puts its house in order.”

The Treasury chief  said the country had not received any Foreign Direct Investment from the west since 2000.

In June 2012, the IMF management approved a Staff-Monitored Programme (SMP) for Zimbabwe. These are informal agreements with IMF staff whereby staff provide advice to the authorities on the design of economic programmes.

They do not entail endorsement by the IMF executive board or financial assistance.

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.