HARARE - Zimbabwe is seeking the African Development Bank (AfDB)’s technical assistance to manage and clear its multi-billion dollar debt. The country, which owes the AfDB $566 million, is saddled by debts — domestic and foreign — of nearly $10 billion.
Finance minister Patrick Chinamasa told the press on Monday that Harare had engaged the regional financier as part of efforts to find “lasting solutions to Zimbabwe’s debt”.
“I have appealed to the bank (AfDB) to come up with a mechanism to help us clear the arrears we have accumulated with multi-lateral creditors,” he said.
The Treasury chief noted that the continued accumulation of external debt arrears was seriously undermining the country’s creditworthiness while it also compromised its ability to secure new credit lines from both bilateral and multilateral financiers.
He, however, urged the AfDB to also provide financial assistance to the private sector as a way of reviving the economy.
“We need to work closely with the African Development Bank and we are re-engaging with them so that they can give support to the productive sector. If our economy starts running, we will be able to repay the external debt of $7 billion,” he said.
This comes after the International Monetary Fund (IMF) last year warned that Zimbabwe’s economy remains fragile with a “precarious” level of external debt that needs to be addressed.
“Zimbabwe’s fragile economic situation is characterised by a growth slowdown, a large external deficit, and low international reserves,” the IMF said in a regular Article IV report on the state of the economy.
“Zimbabwe’s external position remains precarious, with usable international reserves covering less than two weeks of imports,” the Fund said.
The Bretton Woods institution urged the country to clear its over $10 billion debt, to “avoid selective debt service” and improve the business environment.
The IMF resumed its technical assistance programme with Zimbabwe in 2013, a decade after it had suspended the scheme.
Zimbabwe was stripped of its voting rights by the IMF in 2003 and nearly got expelled – a rare move for the Washington-based institution — after it failed to honour its obligations.
But in 2012, the IMF relaxed its restrictions on providing consulting support to Zimbabwe as the country moved towards constitutional reforms and showed improvement in economic policy cooperation with the Fund.
Meanwhile, Alieu Momodou Ngum, the AfDB executive director said the bank’s intention was to make an impact on the economy of member states and improve lives of citizens.
“The Bank has proved to be a trusted and dependent partner for Zimbabwe. We have provided assistance to Zimbabwe when the country was going through difficult times,” he said.