'Clear $1,8bn debt to get fresh funding'

HARARE - The Zimbabwean government has been urged to accelerate the country’s debt repayment plan to allow industry easy access to affordable fresh capital.

Speaking at a meeting with President Robert Mugabe, former Confederation of Zimbabwe Industries (CZI) president Charles Msipa said most businesses had pinned their hopes on government’s re-engagement efforts and clearance of the country’s $1,8 billion arrears to multilateral lenders.

“A debt repayment plan has been agreed, tentatively with the Multilateral Financial Institutions but crucially, finalisation of the concrete Arrears Clearance programme is tied to the domestic macro and structural reforms, which are a prerequisite for sustainable growth and macroeconomic stability.

“Debt and Arrears Clearance will open new opportunities for medium and long term financing, critically important for the productive sectors notably, agriculture, manufacturing and infrastructure sectors,” Msipa said.  

Last year, Zimbabwe missed a self-imposed June 30 deadline for paying its $1,8 billion arrears to the International Monetary Fund (IMF), Africa Development Bank (AfDB) and the World Bank, again missing another deadline this April.

Since then, Finance minister Patrick Chinamasa has been doing the rounds with a begging bowl for the country to honour its obligations.

The country — which has since paid off its IMF $124 million arrears through its special drawing rights with the Bretton Woods Institution — is yet to pay its $600 000 arrears to the AfDB while an additional $1 billion is also outstanding on the World Bank debt.

Responding to this call, Mugabe said Zimbabwe’s debt repayment plan was “progressing well” with Treasury working to mobilise funds to clear the arrears.

He said Zimbabwe — which missed its self-imposed April clearance date — was going to honour its arrears “soon”.

“There has been progress in that regard and we expect the arrears to be cleared soon so that we can get access to fresh money,” Mugabe said.

In 2015, Chinamasa proposed an arrears repayment plan at the IMF/WB annual meetings in Lima, Peru where consensus was reached with creditors on a repayment strategy which entailed the clearance of the country’s $1,8 billion arrears by May 30, 2016.

The date was later on pushed to June 30, but the Treasury chief still failed to meet the deadline.

Presently, multi-lateral financial institutions are barred by law from extending loans to Zimbabwe because of its outstanding debts and clearance of the arrears is anticipated to pave way for lines of new capital.

Initially, to honour these arrears, Chinamasa had said Zimbabwe was borrowing from the Afrexim Bank in Egypt for clearance of AfDB debt while WB debt was to be financed through a loan capital facility.

However, recent reports indicate that Standard Chartered’s parent company, Standard Chartered Plc (Stanchart), is waiting on the approval of the British government to be part of Zimbabwe’s debt resolution plan.

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