HomeBusiness DigestZim undertakes to ‘pay something’ by Q4

Zim undertakes to ‘pay something’ by Q4

BY MTHANDAZO NYONI

GOVERNMENT says it will start paying “something to every creditor” that it owes during the fourth quarter of this year, as it tries to avoid fiscal sustainability risks.

Zimbabwe’s public debt, at the end of December 2020, was estimated at US$14,8 billion, about 78% of the country’s gross domestic product (GDP).

The unsustainable debt situation is one of the factors driving the country’s long-running economic crisis, escalating poverty as funding that would ordinarily be reserved for social services has ended up being channelled towards debt servicing.

Finance minister Mthuli Ncube said the government had started paying international creditors.

“We are focused on arrears clearance,” the Treasury chief told journalists in Bulawayo.

“Every day I have about two intense discussions with international creditors on arrears clearance. So we are onto it, we are pushing hard but we have resumed our payments to the World Bank, African Development Bank and the European Investment Bank (EIB). We have resumed our payments and we have also offered to pay every country that we owe money,” he said.

“We want to be known as good debtors and not bad debtors. That’s a very important signal and objective. So come the fourth quarter of this year, we will be paying something to every creditor that we owe money out there. We are that serious about dealing with our debt but we continue negotiating on the elimination of the quantum of arrears, restructuring of our external debt going forward,” he said.

Multilateral external debt, as at the end of September 2020, stood at US$2,65 billion, according to official data.

About 90% of the debts were arrears. Arrears to the World Bank totalled US$1,33 billion, while arrears to the African Development Bank amounted to US$689 million.

The EIB was owed US$329 million while other multilateral creditors were owed US$28 million.

Similarly, bilateral external debt is estimated at US$5,56 billion, with arrears accounting for 71% of total bilateral debt.

The debt owed to Paris Club creditors stood at US$3,63 billion while non-Paris Club countries were owed US$1,63 billion.

Ncube said the debt stock was marginally above the Southern African Development Community-recommended threshold of 60% of GDP and the Public Debt Act threshold of 70% of GDP.

“There you can also throw in compensation to the farmers for improvements, on which we agreed to pay them US$3,5 billion. We are already paying but what we want to do is to move faster now that we know how much it is, we can find a way to structure the payment so that we can pay faster and get this behind us,” he said.

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