Zimbabwe’s external debt up by 11%

Godfrey Marawanyika

ZIMBABWE’S external debt increased from US$3,857 million to US$4,270 million by the end of December last year, the Reserve Bank of Zimbabwe (RBZ) has said in its annual report. <
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During the year under review, the debt to government dominated the medium to long-term debt stock.


As a proportion of the total external debt, government borrowings accounted for 77%.


“Zimbabwe’s total external debt disbursed and outstanding (including arrears) is estimated to have increased from US$3,857 million in 2003 to US$4,270 million by end December 2004, representing an increase of 11%,” RBZ said.


“Although the inflows were not much in 2004 (only US$22,6 million from China), the increase relative to previous years mainly reflects the weakening of the United States dollar against all major currencies in which the country’s debt is denominated.”


The RBZ said the medium to long term external debt has continued to dominate the external debt stock, accounting for 97% of the total.


“This category of debt increased from US$3,688 million to US$4,136 million by end of December 2004,” the RBZ said.


“Short term debt, which is largely trade finance related; that is, exports credits, suppliers credits of up to one year and standby credits sourced by the Reserve Bank of Zimbabwe from international capital markets accounted for 3,0% of the debt stock as at end of December 2004. This reflects a decline of 0,5% from US$169 million in 2003 to US$134 million by the end of the year.”


In 2004, facilities sourced by the central bank for the procurement of fuel and grain amounted to US$73 million.


Most of the 2004 debt was contracted mainly to finance the economic reform programme which was launched in 1991. The 2004 external debt includes the US$305 million debt which Zimbabwe previously owed to the International Monetary Fund (IMF).


Zimbabwe has now repaid the Bretton Woods institute US$135 million, promising that by next year the debt would have been settled.


Apart from financing the reform programme, government external debt borrowings have been for the purposes of financing ongoing developmental projects such as health facilities, rural road networks and transport.


Various parastatal bodies collectively accounted for 18% of the total medium term debt by the end of last year.


In absolute terms, parastatal debt stock stood at US$765 million, an increase of around 7% over 2003. The increases resulted from the disbursements of Chinese loans to Zimbabwe Electricity Supply Authority and the Zimbabwe Revenue Authority.


“The external borrowings of parastatal have largely been used to finance the infrastructure requirements with regard to the provision of electricity (Zesa), rail transport (NRZ) and telecommunications (Tel*One and Net*One,” the report said.


“The private sector continued to borrow for the purposes of importing replacement machinery, capital equipment, pre- and post-shipment trade finance and for various expansion and new projects. Private sector external debt declined from US$191 million to US$125 million.”


Of the country’s total debt, 48% is owed to multilateral creditors, while bilateral and commercial creditors are owed 47% and five percent respectively.

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