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Zim still can not borrow money from IMF- policy analyst

by Stephen Jakes
07 Dec 2015 at 05:44hrs | Views
A Bulawayo based policy analyst Batler Tambo has said Zimbabwe had had its voting rights at the International Monetary Fund (IMF) revoked in 2003 because of arrears on payments and while those were restored in 2010, it still cannot borrow.

He said the debt arrears clearance road map takes into account the fact that Zimbabwe does not qualify for Highly Indebted Poor Country (HIPC) and the Multilateral Debt Relief Initiative.

"The country's Strategy in respect of clearing debt arrears is, therefore, premised on a non-HIPC debt resolution strategy, and supported by a credible economic reform agenda to ensure debt sustainability, unleashing economic transformation and poverty eradication," said Tambo.

"The Strategy is anchored on the clearance of external debt arrears to the three IFIs, namely the IMF, the World Bank Group and the African Development Bank, as a first step towards seeking debt treatment by the Paris Club and bilateral creditors in the context of a strong economic reform programme."

Tambo said the resolution of external debt arrears to IFIs is to be achieved through a combination of the following strategies that Government has put in place such as the  use of domestic resources to clear US$111 million arrears to the IMF; arrangement of Bridge finance with regional and international banks to clear US$601 million African Development Bank debt arrears and   use of a medium to long-term loan facility to clear US$1.1 billion arrears to the World Bank Group.

"It is envisaged that the settlement of external payment arrears by Government to the tune of US$1.8 billion owed to multilateral creditors, would be completed in the first half of 2016 (2016 National Budget Statement)," he said.

"The strategy will include use of domestic resources to clear US$111 million arrears to the IMF and the problem with this strategy is that will lead to government borrowing through issuance of Treasury Bills to get the money for financing debt clearance which will deprive the domestic markets of liquidity therefore making the cost of borrowing money more expensive for local businesses as they would have to compete with government for the limited financing available in the local markets."

Tambo said this is already in addition to the government intending to borrow an additional US$150 million to cover the budget deficit.

"This will have the effect of seeing more company closures as they will not be able to borrow any cheap finance that can be available," he said.

"It is also mind boggling how the Zimbabwean government will all of a sudden be able to pay back US$1,8 billion in 6 moths yet it was only able to pay back US$400,9million to external funders which translates to a mere US$44,5million per month and so one wonders how they will be able to pay back an average US$300million per month."


Source - Byo24News
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