Finance minister, Tendai Biti, this week launched the Zimbabwe Accelerated Arrears Clearance Debt and Development strategy, in a bid to lower the country’s debt.
Zimbabwe’s external debt of US$9,1 billion, translates to 118% of the country’s GDP. Analysts have long said it would be difficult to realise the United Nations’ Millennium Development Goals in the absence of a resolution on the external debt.
The country owes the African Development Bank US$550 million, the World Bank US$1,5 billion and the Paris Club US$3,3 billion. In terms of the split of the multilateral debt, the World Bank is owed 45%, AfDB 21%, IMF 22% and the EIB 9%. The Paris Club makes up 85% of the bilateral debt.
Although Zimbabwe has achieved economic stability, the debt was the only macro-convergence figure that the country was not complying with.
Biti said the strategy was a hybrid model seeking to end Zimbabwe’s isolation in terms of funding.
He said the plan would include the adoption of the traditional debt-resolution initiative in the post Highly Indebted Poor Country (HIPC) status, combined with leveraging the country’s natural resources to achieve sustainable economic development. The major issue, Biti added, would be to deal with major infrastructure deficiencies.
“It is clear that Zimbabwe cannot rehabilitate its infrastructure and move forward with socio-economic transformation reforms if the debt overhang challenges persist,” he said.
Under the plan, government would firstly leverage on natural resources in pursuit of economic development.
This will entail finalising the new Mining Legal Framework, carrying out a geological mineral survey as well as establishing a framework which incorporates development funds for the benefit of communities.
On completion of the leveraging processes, Biti said government would re-engage the international community on the removal of sanctions, re-engage creditors for the clearance of arrears and debt relief, and also re-engage the IMF and all the other creditors. Biti said cabinet and government had been working on this since 2010.He called on the international market to judge the country by what has been achieved since dollarisation, rather than from a political viewpoint.
Speaking at the Euromoney Conference which started in the capital on Wednesday, Biti said Zimbabwe’s position cannot be compared to Greece or the US where children were born with debt in excess of millions.
“In Zimbabwe every child is born into a US$50 000 debt,” said Biti.
He pointed out that in order to get the economy back to the 1990 levels, Zimbabwe needed US$14 billion.