Business / Economy
Zimbabwe classified as a 'grant-only country'
09 Jun 2013 at 09:58hrs | Views
ZIMBABWE has been classified a "grant-only country" status by the African Development Bank (AfDB) and requires the same nod from the World Bank to qualify for debt relief and interest-free loans under the Heavily Indebted Poor Countries (HIPC) initiative.
HIPC provides debt relief and low-interest loans to either cancel or reduce external debt repayments to sustainable levels.
This comes at a time the debt-burdened country is engaging creditors to resolve the over US$10 billion external debt.
The government has engaged multilateral financing institutions on the resolution of the country's debt overhang under a recovery programme, the Zimbabwe Accelerated Re-engagement Economic Programme (Zarep).
Zarep would be monitored through the IMF Staff Monitored Programme expected to take effect this month.
Ebrima Faal, AfDB director for southern Africa told Standardbusiness that Zarep would support Zimbabwe's arrears clearance, debt relief initiatives and mechanisms through ensuring a track record of implementing sound macro-economic policies with anticipated support from development partners.
"Despite progress made, issues outstanding for Zimbabwe include the need to clarify if Zimbabwe will be granted relief under the HIPC initiative, noting that the Bank's arrears clearance programme is designed and implemented within a coordinated HIPC framework with the IMF and the World Bank," Faal said.
"The classification of Zimbabwe to a grant-only country status by the World Bank is an important requirement that needs to be fulfilled for HIPC or HIPC-like eligibility. The AfDB has already classified Zimbabwe to a grant-only country status."
Zimbabwe, alongside Sudan and Somalia, are in line to tap into the US$500 million set up by AfDB, for the trio to access and clear arrears.
The facility is available under the auspices of the African Development Fund (ADF) and is meant for fragile states to help clear their arrears.
Cote d'Ivoire and Togo accessed the funds under the ADF-12 that ran from 2008 to 2010.
Faal said Zimbabwe, Sudan and Somalia are on track in terms of the technical requirements for arrears clearance support from the Bank Group and the commitment by respective governments to normalise relations with the international community.
"If the current momentum is sustained, it is likely all the three countries could qualify for arrears clearance during the ADF-13 period [2014-2016]," Faal said, adding that the facility is accessed on a first come-first serve basis.
He said the ADF Deputies (representing the governors of the ADF State participants or donors), under ADF-12 in its meeting in Praia, Cape Verde in September 2012, considered ring-fencing the resources set aside for arrears clearance for Zimbabwe, Sudan and Somalia through the ADF-12 period, with a presumption that they could be rolled over into ADF-13 if necessary.
Faal said AfDB bank management would present to the deputies progress made by the three countries and assessment of potential utilisation of the resources under ADF-12 and/or ADF-13 which commences in 2014.
HIPC provides debt relief and low-interest loans to either cancel or reduce external debt repayments to sustainable levels.
This comes at a time the debt-burdened country is engaging creditors to resolve the over US$10 billion external debt.
The government has engaged multilateral financing institutions on the resolution of the country's debt overhang under a recovery programme, the Zimbabwe Accelerated Re-engagement Economic Programme (Zarep).
Zarep would be monitored through the IMF Staff Monitored Programme expected to take effect this month.
Ebrima Faal, AfDB director for southern Africa told Standardbusiness that Zarep would support Zimbabwe's arrears clearance, debt relief initiatives and mechanisms through ensuring a track record of implementing sound macro-economic policies with anticipated support from development partners.
"Despite progress made, issues outstanding for Zimbabwe include the need to clarify if Zimbabwe will be granted relief under the HIPC initiative, noting that the Bank's arrears clearance programme is designed and implemented within a coordinated HIPC framework with the IMF and the World Bank," Faal said.
"The classification of Zimbabwe to a grant-only country status by the World Bank is an important requirement that needs to be fulfilled for HIPC or HIPC-like eligibility. The AfDB has already classified Zimbabwe to a grant-only country status."
Zimbabwe, alongside Sudan and Somalia, are in line to tap into the US$500 million set up by AfDB, for the trio to access and clear arrears.
The facility is available under the auspices of the African Development Fund (ADF) and is meant for fragile states to help clear their arrears.
Cote d'Ivoire and Togo accessed the funds under the ADF-12 that ran from 2008 to 2010.
Faal said Zimbabwe, Sudan and Somalia are on track in terms of the technical requirements for arrears clearance support from the Bank Group and the commitment by respective governments to normalise relations with the international community.
"If the current momentum is sustained, it is likely all the three countries could qualify for arrears clearance during the ADF-13 period [2014-2016]," Faal said, adding that the facility is accessed on a first come-first serve basis.
He said the ADF Deputies (representing the governors of the ADF State participants or donors), under ADF-12 in its meeting in Praia, Cape Verde in September 2012, considered ring-fencing the resources set aside for arrears clearance for Zimbabwe, Sudan and Somalia through the ADF-12 period, with a presumption that they could be rolled over into ADF-13 if necessary.
Faal said AfDB bank management would present to the deputies progress made by the three countries and assessment of potential utilisation of the resources under ADF-12 and/or ADF-13 which commences in 2014.
Source - The Standard
