African Development Bank (AfDB) president Dr Akinumwi Adesina, the chief facilitator for Zimbabwe’s arrears clearance and debt resolution process is expected in the country tomorrow to attend the second key stakeholders’ meeting on the country’s debt strategy.
The second structured dialogue platform set for Thursday will also be attended by former Mozambican President Joaquim Chissano, the other high-level facilitator, who landed in the country on Sunday evening.
Dr Adesina accepted President Mnangagwa’s request in July last year to champion Zimbabwe’s debt clearance roadmap in order for the country to access new money from international financial institutions (IFIs).
The AfDB president then held inaugural meetings with developmental partners and the private sector in order to appreciate the full picture of Zimbabwe’s debt situation.
In December 2022, the Government established the Structured Dialogue Platform comprising all creditors and development partners to find working solutions to deal with Zimbabwe’s long standings arrears.
Andrew Bvumbe, the head of debt management in the Ministry of Finance and Economic Development confirmed the developments that the process had begun and proposals were submitted to the AfDB president at the end of last month.
“Yes, there was an inaugural meeting of the Economic Growth and Stability Sector Working Group (SWG) and the other SWG is on Governance,” Mr Bvumbe said.
According to him, it was agreed at the Inaugural Structured Dialogue Platform meeting on December 1, 2022 that these two SWGs would feed into the high-level Structured Dialogue Platform meetings by producing matrices of reforms to be implemented as key elements of the arrears clearance and debt relief process being championed by president Adesina of the AfDB.
Mr Bvumbe added that “The two SWGs started the process of consultations on these reforms. The members are drawn from Government, creditors, development partners, private sector and civil society organisations.
Mr Chissano
“The Governance SWG had its inaugural meeting in January and the outcomes of these two meetings will be presented to the high-level Structured Dialogue Platform meeting slated for the end of this week.”
According to the Treasury, total external debt, as at end of September 2022 is estimated at US$14,04 billion, including US$5,7 billion bilateral debt, which is 41 percent of the total, US$2,6 billion multilateral debt, representing 18,4 percent of the total debt.
Reserve Bank of Zimbabwe debt, which represents 24 percent of the external debt amounts to US$3,4 billion, including US$2,3 billion from blocked funds constituting 16,6 percent of total debt.
Of the total bilateral external debt of US$5,7 billion, Paris Club debt amounts to US$3,6 billion, while US$2,2 billion is owed to Non-Paris Club creditors.
The unsustainable debt overhang, Finance and Economic Development Minister said last year, was hindering access to new affordable external financing and economic development in Zimbabwe.
“The external debt overhang continues to weigh down heavily on the country’s development efforts, as access to external financing remains very limited due to the accumulation of external debt arrears,” Minister Ncube told Parliament in November last year.
Of the total external debt of US$8,3 billion excluding RBZ debt and blocked funds, principal and interest arrears and penalties represent 76 percent at US$6,3 billion of the amount owed.
Minister Ncube added that “The bulk of the external debt stock is made up of principal arrears of US$2,7 billion, interest arrears of US$1,6 billion and penalties of US$2,1 billion, while the debt outstanding and disbursed accounts for US$2,03 billion.” Zimbabwe has been making token payments to all the foreign financiers it owes among them the Paris Club, which has 17 members, the World Bank and the African Development Bank (AfDB).
According to the AfDB, Zimbabwe has continued to make token payments of about US$700 000 each quarter to service some of the outstanding debt to various creditors. As part of the re-engagement process, the Government is making quarterly token payments of US$3,2 million to the IFIs and the 16 Paris Club creditors. – The Herald
