FINANCE minister Patrick Chinamasa recently came back from the International Monetary Fund and World Bank 2015 spring meetings with the sobering realisation that Zimbabwe has a long way to ensure debt rescheduling or debt relief.
Informed diplomatic sources said this week the minister got a reality check during the meetings to discuss the global economy and financial situation in Washington D.C. Chinamasa held meetings with officials from multilateral lending institutions and donors in a bid to build consensus among creditors and development partners on ways to address Zimbabwe’s debt arrears and new funding issues.
Zimbabwe, grappling with a severe liquidity crunch, has an external debt and outstanding arrears of about US$10 billion.
The huge debt has made it difficult for the country to attract new finance from the private sector or attract funds from multilateral institutions and donor countries, hence government’s decision to engage creditors for relief.
Multilateral institutions and donor countries have, however, demanded that the country embarks on a raft of economic and political reforms before entertaining any hopes of attracting new funds.
Diplomatic sources in the European Union (EU) told the Zimbabwe Independent this week Chinamasa, who is playing a prominent role in government’s re-engagement programme with multilateral institutions and western countries, held a number of bilateral meetings with Zimbabwe’s creditors in Washington D.C as he pushed for funds while trying to convince them that the country was committed to reforms.
“It was clear that Chinamasa and some officials are trying their utmost best and are committed to reforms. There are, however, serious doubts on the commitment of other senior government officials and this proved to be a stumbling block for Chinamasa,” said a senior diplomat.
“It is a pity that while Zimbabwe is engaging, many things of concern are still occurring in the country. These include the lack of respect for property rights. The country is still experiencing disturbances on farms and the disturbances are not limited to white farmers alone.”
The diplomat added that court orders continue to be violated. He said it was also sad that the factional fights in Zanu PF have now descended into violence like we are seeing in Hurungwe.
“We thought this (violence) was a thing of the past but it is still occurring so naturally people question the country’s commitment when such things occur,” the diplomat said.
Zimbabwe is implementing a 15-month Staff-Monitored Programme with the Bretton Woods institution, under which the country committed itself to strengthening its external position as a pre-requisite for arrears clearance, resumption of debt service and restoration of access to external financing.
The government also pledged to consolidate its fiscal position, accumulate international reserves and mobilise international support for resolving the country’s external debt situation, while also restoring confidence in the financial sector and improving public debt and financial management.
In addition, government has promised reforms to enhance the business climate, boost productivity and competitiveness as well as build confidence.
Another diplomat pointed out that on several occasions Chinamasa was asked about Itai Dzamara’s abduction during the bilateral meetings he held to push Zimbabwe’s case.
The diplomat said most Western countries were very concerned about Dzamara’s disappearance and wanted the government to show commitment in their investigations.
“It was also clear that policy inconsistency was still of concern in Zimbabwe. Chinamasa announced the scrapping of civil servants bonuses only for the President (Robert Mugabe) to publicly rebuke him while he was in Washington. It gives the sense that the government is not pulling in the same direction,” the diplomat said.
The diplomats also said they were aware that Zimbabwe had no capacity to settle its debts, despite making token payments to the IMF and other creditors such as the African Development bank.
They, however, said it was impossible for the debt to be rescheduled or for Zimbabwe to get debt relief, allowing the country to attract new funding when those in leadership were still not yet fully demonstrating their commitment to reform and change.
“But at the same time there has been an effort to make some reforms and these need to be encouraged. This is the reason why some funding has come to Zimbabwe although it is not being channelled directly to the government,” said the diplomat.
The diplomat said the funding that has come Zimbabwe’s way was in response to the progress government had made although there is consensus that the country needs to show more commitment towards reforms.
In February, Zimbabwe and the EU signed the National Indicative Programme which will see the European Union providing the country development assistance valued at US$270 million under the 11th European Development Fund.
Zimbabwe will receive funding until 2020 for projects in the sectors governance and institution building, health, and agriculture-based economic development.