United Kingdom backs Zimbabwe’s debt clearance bid

 . . . to continue participating in resolution talks

Debra Matabvu

THE United Kingdom has committed to continue participating in Zimbabwe’s arrears clearance and debt resolution process despite the United States’ disengagement from the negotiations last week.

In an interview with The Sunday Mail, UK Ambassador to Zimbabwe Mr Pete Vowles reaffirmed London’s commitment to the debt clearance talks, highlighting the potential benefits of restructuring the country’s debt.

He emphasised that reaching a consensus would pave the way for Zimbabwe to access vital global finance and unlock opportunities for economic growth.

The fifth round of the Structured Dialogue Platform on arrears clearance and debt resolution process — spearheaded by former Mozambican President Joachim Chissano and African Development Bank (AfDB) head Dr Akinwumi Adesina — will be held next month.

The UK’s stance stands in stark contrast to the US’ recent disengagement and is expected to inject renewed impetus into the talks going into the forthcoming round of negotiations.

While Washington has decided to walk away, most creditor nations who are part of the process, such as the UK, France, Germany and Japan, have remained at the table.

Multilateral lenders such as the World Bank, International Monetary Fund (IMF) and AfDB are also part of the negotiations.

“As one of those countries, one of the creditors, we are really excited to be around the table with the Government of Zimbabwe and others, looking at their political and economic reform plans,” said Amb Vowles.

“These are the reform plans that the Zimbabwe Government agreed to . . . covering three broad tracks — the economic, the governance and the land reforms — that they set out.

“It is fantastic that this has been led by Zimbabwe and also supported by the region.”

The process, he said, was “very much a Zimbabwe initiative supported by the region”.

Amb Vowles said he was pleased that Zimbabwe was making progress in implementing some of the reforms agreed to during negotiations.

The parties have endorsed a three-pronged strategy to guide Zimbabwe through the arrears clearance and debt resolution programme.

The strategy entails implementation

of economic reforms and recalibration of Zimbabwe’s governance systems.

The country has also made a commitment to compensate white former commercial farmers for improvements made on farms and resolve cases of farms covered by Bilateral Investment Promotion and Protection Agreements (BIPPAs) that were affected during the Land Reform Programme.

“We are at the early stages, and we have just started, but I am hopeful, and there have been some early signs of progress across some of those reform areas,” said UK’s envoy.

“It is quite technical, but the finance reforms at the International Monetary Fund (IMF) are working with the Minister of Finance, and I am hoping that they will come to a decision in April.

“Also, the Finance Minister (Professor Mthuli Ncube)’s announcements just before Christmas on land compensation … so these are good early signs of progress.

“I am keen that we keep up the momentum … We are committed as the UK to be at the table to discuss those issues.

“That is a great forum for us to talk about the political and economic reforms that the Government is working towards as creditors so that we can actually move forward on it.

“Because if we can find a way collectively to restructure that debt, that could be game-changing for Zimbabwe and Zimbabweans going forward.”

Experts say successful restructuring of Zimbabwe’s debt could involve debt forgiveness, rescheduling of payments and adjustments to interest rates, while partial clearance of arrears may allow Zimbabwe access to new loans.

This year, Treasury has set aside US$55 million to compensate white former farm owners whose land was appropriated under the Fast-Track Land Reform Programme.

Compensation of the farmers is a central pillar of the debt and arrears negotiations.

About US$35 million will go towards compensating former owners of farms covered under the Global Compensation Deed, signed between the Government and white former commercial farmers in 2020.

The rest will be directed towards the farms protected by BIPPAs that were affected by the land reform.

Government has committed to paying the farmers US$3,5 billion under the Global Compensation Deed.

United Kingdom-based financial advisory firm Newstate Partners has since been engaged to explore options for raising funds from international markets to support the programme.