Consultations begin on Zim’s debt clearance

15 Jan, 2023 - 00:01 0 Views
Consultations begin on Zim’s debt clearance

The Sunday Mail

Business Reporter

Consultations on Zimbabwe’s arrears clearance and debt relief process, which will be led by African Development Bank (AfDB) President Dr Akinwumi Adesina and assisted by former Mozambican President Joachim Chissano, have begun.

Two sub-committees – the Economic Growth and Stability Sector Working Group (SWG), and the Governance SWG – have since been created and will feed into the High-Level Structured Dialogue meetings that will consider the path the country would take to clear the amounts it owes to various creditors.

The technical committee includes representatives from Government, civil society, donors and the business community.

It will be co-chaired by World Bank and International Monetary Fund (IMF) representatives.

Mr Andrew Bvumbe, head of debt management in the Ministry of Finance and Economic Development, said proposals will be forwarded to Dr Adesina by the end of this month.

“Yes, there was an inaugural meeting of the Economic Growth and Stability Sector Working Group and the other SWG on Governance,” Mr Bvumbe said.

At the inaugural structured dialogue platform meeting on December 1 last year, it was agreed that the two SWGs will feed into the High-Level Structured Dialogue meetings by producing reforms to be implemented as key elements of the arrears clearance and debt relief process being championed by Dr Adesina.

“The two SWGs have started the process of consultations on these reforms. The members are drawn from Government, creditors, development partners, private sector and civil society organisations,” he said.

“The Governance SWG will have its inaugural meeting next week (this week) and the outcomes of these two meetings will be presented to the High-Level Structured Dialogue platform meeting slated for the end of this month.”

In July last year, Dr Adesina accepted President Mnangagwa’s request to champion Zimbabwe’s debt clearance roadmap.

The AfDB president subsequently held inaugural meetings with developmental partners and the private sector to get a full appreciation of the situation.

“I had meetings with all the developmental partners and also the private sector through chief executive officers in order to understand and appreciate what needs to be done in order to get where we need to be,” Dr Adesina said in July 2022.

President Mnangagwa also had a private meeting with Dr Adesina’s team on the sidelines of the Organisation of African, Caribbean and Pacific States (OACPS) summit in Angola late last year.

“And also then, of course, on the sidelines we discussed with (Dr Akinwumi) Adesina’s team.

“We appointed Adesina — the President of AfDB — as our champion of rescheduling our debt with the Paris Club.

“He is being assisted by former President (Joachim) Chissano. We drew up a framework on such discussions, on how the matter is going to continue,” said President Mnangagwa then.

According to Treasury, total external debt as at September 2022 is estimated at US$14,04 billion, including US$5,7 billion of bilateral debt (41 percent of the amount) and US$2,6 billion of multilateral debt (18,4 percent).

RBZ debt, which represents 24 percent of external debt, is US$3,4 billion.

Blocked funds amount to US$2,3 billion.

Of the total bilateral external debt of US$5,7 billion, the Paris Club debt amounts to US$3,6 billion, while US$2,2 billion is owed to non-Paris Club creditors.

“The external debt overhang continues to weigh down heavily on the country’s development efforts, as access to external financing remains very limited due to the accumulation of external debt arrears,” Minister of Finance and Economic Development Professor Mthuli Ncube told Parliament in November last year.

Of the total external debt of US$8,3 billion, excluding the RBZ debt and blocked funds, principal and interest arrears and penalties represent 76 percent or US$6,3 billion.

Minister Ncube added: “The bulk of the external debt stock is made up of principal arrears of US$2,7 billion, interest arrears of US$1,6 billion and penalties of US$2,1 billion, while the debt outstanding and disbursed accounts for US$2,03 billion.”

Zimbabwe has been making token payments to all creditors.

According to the AfDB, Zimbabwe has continued to make token payments of about US$700 000 each quarter to service some of the outstanding debt to the World Bank and others.

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