AfDB president heads for Zim

24 Apr, 2022 - 00:04 0 Views
AfDB president heads for Zim

The Sunday Mail

Tapiwanashe Mangwiro
Senior Business Reporter

African Development Bank (AfDB) president Dr Akinwumi Adesina is heading to Zimbabwe next month for talks on the debt repayment strategy with the Ministry of Finance and Economic Development.

This comes after the head of the Ivory Coast-based regional pan-African bank volunteered to be the principal monitor of Zimbabwe’s plans on expunging its debt overhang.

Finance and Economic Development Minister Professor Mthuli Ncube revealed this after meeting the AfDB president in the United States of America, where the Treasury chief was attending the World Bank and International Monetary Fund (IMF) Spring Meetings last week.

Early this month, AfDB reaffirmed its support for Zimbabwe on its debt and arrears clearance strategy, which will be bolstered by the scheduled visit from Dr Adesina.

The commitment was made by an AfDB delegation led by acting vice president (regional development, integration and business delivery) Ms Yacine Fal, which was in the country recently. “The president of the AfDB will be in the country next month as he has put himself forward as a candidate to help the country come up with good staff-monitored programmes, which also include (those of) the International Monetary Fund,” Minister Ncube said on Friday.

Zimbabwe’s debt stood at US$19 billion, according to updates given by the IMF at the conclusion of the Fund’s Article IV consultations in March this year.

Of that amount, public and publicly guaranteed debt stood at US$17,6 billion, with US$13,1 billion representing outstanding arrears for the unpaid interest.

Minister Ncube said Zimbabwe was working on a debt clearance plan with creditors, which entailed staff-monitored programmes meant to find a sponsor who can help the country repay its debts. Debt sponsorship is when a country finds another country to assist it to pay off its debts to international financial institutions (IFIs) through soft loans it can use to repay the sponsorship debt or part of it.

This can give a country access to reasonably priced loans instead of taking punitively expensive loans such as funding options extended by bilateral lenders. Minister Ncube also had re-engagement meetings with various foreign lenders on the sidelines of the meetings in Washington, including the 17 members of the Paris Club, a grouping of major creditors.

Speaking from Washington DC, he said: “The country has been making token payments to its creditors, who have expressed their gratitude to the gesture, but our hope and wish is to expunge the total debt.”

Zimbabwe is making token payments to the Paris Club creditors, in addition to similar payments being made to the World Bank and AfDB.

“We are now making token payments to the 17 members of the Paris Club. This means that we are now servicing all our creditors, and payments are being made quarterly for the past nine months.”

Zimbabwe is presently ineligible to get loans from the IFIs due to its external debt and economic sanctions from the US, which excluded it from the Covid-19 debt relief extended to countries such as South Africa and Zambia by the IMF.

“Zimbabwe has been a member of the IMF in good standing since it repaid arrears outstanding in late 2016. However, Zimbabwe has external arrears to multilateral development institutions (World Bank, AfDB and European Investment Bank). As a general rule, the IMF is prevented from lending to any member country that has arrears to other international financial institutions,” the IMF said in November 2021.

Experts say servicing of huge debts diverts money meant to finance public expenditure, resulting in poor access to basic services — health, education, water, and sanitation – while  local industry cannot access affordable loans from international funders due to the country’s debt profile, which would be deemed risky.

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