HARARE - The European Union (EU) says it supports Zimbabwe’s debt repayment strategy and will facilitate for “progressive” discussions with creditors at the upcoming multilateral lenders meetings in Lima, Peru.
The EU ambassador to Zimbabwe, Philippe Van Damme, yesterday told delegates at the signing ceremony of the €89 million under the 11th European Development Fund that while Zimbabwe’s reform agenda is “demanding” the trading bloc was in support of the efforts.
“The reform agenda you will present to Zimbabwe’s creditors in Lima is ambitious and demanding… The EU and its member states stand on your side with all the means at their disposal to make it happen,” he said.
Van Damme’s remarks come in the wake of Finance minister Patrick Chinamasa’s recent announcement that Zimbabwe was set to meet up with multilateral creditors next month at the next meeting of the International Monetary Fund (IMF) and the World Bank (WB) in Lima.
Chinamasa said that the country’s $1,8 billion arrears were the main reason the meetings had been scheduled as the country was interested in coming up with repayment mechanisms.
Meanwhile, the EU envoy said while Zimbabwe had come up with the reform agenda, government had to “walk the talk”
“But you will now have to go further, walking the talk, and move to the concrete, sometimes painful, operationalisation of the promised reforms,” he said.
Speaking at the same event, Chinamasa yesterday said the country preferred Foreign Direct Investment (FDI) as a capital route, to loans.
“Loan capital at the moment is something we can ill-deal with as it will burden the fiscus taking into account things like the expense of the loans in interest rates.
“The optimum for us is FDI, which we are working to increase through various initiatives as government,” said Chinamasa.
The Treasury chief also said he was not in a position to disclose the country’s “reform agenda”
“I do not want to unpack the strategy, because it would not make sense for the creditors to learn of the debt repayment plan through the press,” he said.
Zimbabwe is saddled with an external debt of nearly $10 billion and owes the IMF $124 million in arrears accrued since 2000 and another $1 billion owed to the WB.
Economic experts say financial institutions including the WB and African Development Bank (AfDB) are barred by law from extending loans to Zimbabwe because of outstanding debts.
However, the AfDB board is in the process of approving a grant for Zimbabwe to repay the $601 million arrears owed to the lender by the country.
Meanwhile, the EU yesterday disbursed €89 million under the 11th European Development Fund 2014-2020 National Indicative Programme of a €234 million facility initially unveiled last year.