Zim engages Germany over $740m debt

HARARE - Zimbabwe is engaging Germany to settle a $739 million debt owed to the European country, a move meant to thaw frosty relations and pave way for Foreign Direct Investment (FDI).

Finance minister Patrick Chinamasa yesterday met visiting German director for sub-Saharan Africa and Sahel regions, Georg Schmidt and admitted that Germany was the country’s largest creditor in the Paris Club.

“As you may know, Germany is the largest creditor among the Paris Club creditors, we owe Germany $739 million, which reflects naturally the level of economic engagement that existed before the sanctions hit us. So the efforts we are making are to restore that relationship,” Chinamasa said.

He noted that the visiting envoy had extended an invitation to Zimbabwe so that technical experts could go to Germany and craft a way of settling the debt.

The Treasury chief added that the country was going to take a “step-by-step approach” in settling the debt as it sought to move back into Germany’s good graces”.

“Nothing will happen overnight, we have agreed that technical teams will go to Berlin to work around the issue of settling the debt. We need to approach the whole issue with an open mind and spirit. As we go, we will see what speed we can make towards restoration of relations,” the minister said.

The country is currently saddled with an external debt of nearly $10 billion.

Schmidt said observing the rule of law was critical in attracting investors to the country, adding disputes must be settled amicably to gain investor confidence.

“It is important in political terms that people can feel that they are protected by the law but it’s also important in economic terms because it is the thing that foreign investors look at before they engage.

“Economics can never be separated from the political situation so political stability and economic prosperity go hand in hand,” said the German envoy, who is in the country on a two-day visit at the invitation of a German think tank to attend a conference on the progress of the implementation of Zimbabwe’s new Constitution.

Last year, the European Union (EU) lifted sanctions imposed on Zimbabwe 13 years ago on allegations of human rights abuses.

The move paved way for the union to resume aid to hard-pressed Zimbabwe.

Earlier this year, the EU gave Zimbabwe $270 million in development assistance, with most of the money expected to fund numerous projects which include health and the constitutional alignment.

This comes as Chinamasa recently announced he had come up with a strategy to settle the country’s colossal international debt, which will see him negotiating with multilateral lenders first as they are owed the most then asking them to mediate for the country to bilateral institutions like the Paris Club.

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