Zim grant awaits AfDB board nod

HARARE - The African Development Bank (AfDB) management is developing a paper for its executive board to authorise a grant to be availed to Zimbabwe for the country to clear its $600 million arrears to the lender, a Cabinet minister has said.

In a statement released yesterday, Finance minister Patrick Chinamasa said the funds aimed at the clearing of Zimbabwe’s arrears to the AfDB were to be availed under the Pillar II of AfDB’s Transition Support Facility.

“The final decision, and the size of the envelope, rests with the executive board of the AfDB. The window remains open until December 2016,” said Chinamasa.

According to the AfDB website, Pillar II of the Transition Support Facility is awarded to “fragile economies.”

“To maximise the bank group’s contribution to building resilient, stable, and capable states. The Strategy is grounded in the principles of the New Deal for Engagement in Fragile States…

“Its effective implementation requires close coordination with international fora, such as the International Dialogue on Peace-building and State-building, and strategic alliances with other development partners,” the website said.

Chinamasa also said the decision by the executive board of the AfDB to clear Zimbabwe’s external payment arrears to the AfDB was dependent on acceptance by all multilateral creditors.

Zimbabwe owes external debt amounting to $10,8 billion as at December 31, 2014 — of which $1,8 billion is owed to the International Financial Institutions (IFIs) including the International Monetary Fund (IMF), the World Bank (WB), AfDB and the European Investment Bank (EIB).

Government is currently engaging all the IFIs with debt repayment strategies.

A delegation led by central bank governor John Mangudya and Chinamasa is expected to meet with creditors at the next meeting of the IMF and the WB scheduled next month in Lima, Peru where the country’s $1,8 billion arrears will be the main agenda for deliberation as well as the country’s repayment mechanisms.

This comes as AfDB executive director, Sibry Tapsoba, last week announced that the multilateral lender had come up with a plan to help Zimbabwe settle its arrears, which have been hindering the country from accessing new loans from multilateral institutions.

“The total amount of Zimbabwe’s arrears to the African Development Bank is $601 million. The resources that we are putting aside will clear the African Development Bank arrears only,” Tapsoba said.

Tapsoba was in the country with a 12-member AfDB delegation to examine Zimbabwe’s debt repayment strategy for its $1,8 billion arrears to the MFIs

Chinamasa told Tapsoba that Zimbabwe was in a “hurry” to clear the arrears by the end of the year, adding that the country was going to set the process in motion as soon as the AfDB availed the money.

According to Tapsoba, the AfDB was also going to avail a $5 million grant for Zimbabwe’s membership in trade bloc, African Trade Insurance.

Economic experts say financial institutions including the WB and AfDB are barred by law from extending loans to Zimbabwe because of outstanding debts.

The IMF is on record stating Zimbabwe will only get funding from the multilateral lender after three years.

 

Comments (2)

The payment of these arrears to AfDB will dpend on creditors agreeing to the debt strategy and the implentation of reforms. The crux of the matter is whether or not Zimbabwe has the political will and commitment to re-engage and implement reforms for growth. With the old man in charge the chances are that no progress will be made. Already some Ministers are sabotaging the process and the old man is not a darling of IMF led policies.We will see if something good will come out the Lima, Peru debt negotiations.

Doomed - 23 September 2015

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