Zimbabwe focuses on debt repayment

Government will use its funding facilities from regional and international financial institutions to clear its foreign debt, Finance and Economic Development Minister Patrick Chinamasa has said.

He told MPs who attended a pre-Budget seminar in Victoria Falls recently that Zimbabwe owed the African Development Bank about $600 million, the World Bank over $1 billion and the International Monetary Fund about $120 million.

Minister Chinamasa said Government would engage "friendly countries" to chip in and help the country clear the World Bank debt to unlock further lines of credit.

He said the debt clearance strategy was endorsed by creditors on the sidelines of the 2015 World Bank and International Monetary Fund annual meeting in Lima, Peru, last month.

Government pledged to settle the arrears by April next year.

"Zimbabwe owes $10,8 billion to external creditors and of that debt, $6,8 billion is owed to external creditors by Government while $4 billion is owed to external creditors by the private sector," said Minister Chinamasa.

"Fortunately, the private sector is servicing its $4 billion debt. So there is no problem and I have been asking external financial institutions 'why are you not continuing to offer credit to the private sector since they have a track record of servicing their loans'? So the problem is with the Government debt."

Minister Chinamasa said while Zimbabwe was a member of the World Bank, IMF and AfDB, it could not access loans from the three institutions because of the debt.

He said rules prohibit financial institutions to lend money to countries that were in arrears and failing to settle their debts.

Minister Chinamasa said Government had re-engaged creditors through a committee chaired by Reserve Bank of Zimbabwe Governor, Dr John Mangudya, on the country's debt clearance strategy.

"Our strategy essentially is that we get money from the African Export-Import Bank (Afreximbank) in Cairo to clear the arrears and simultaneously, we should be able to get new money being made to us by the AfDB," he said.

"We are also going to use our Special Drawing Rights with the IMF to clear the debt which is due to the IMF. And we are going to use one or two friendly countries to help us clear the debt to the World Bank.

"That is the strategy we took to Lima. All those who spoke, from the UK representative, to the United States representative, Australia, Germany, France they all supported and asked that the financial institutions should help Zimbabwe recover from its current economic situation," he said.

MPs hailed Minister Chinamasa for his commitment to re-engage creditors.