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Zimbabwe pays US$44m of foreign debt

by Staff reporter
29 Nov 2021 at 00:36hrs | Views
PRESIDENT Emmerson Mnangagwa's administration paid US$44,2 million to foreign creditors during the nine months to September, as part of its refreshed debt repayment plan, data showed at the weekend.

The data released by Finance minister Mthuli Ncube in his annual debt analysis showed that Zimbabwe's external debt increased to US$13,7 billion during the period.

But at this rate of settlement, it could take Harare over 300 years to pay off the mounting debts and interest.

Harare's unsettled debt to international lenders was estimated at US$10,7 billion early this year.

Big global lenders have turned their backs on Zimbabwe citing inability to service existing commitments.

But Ncube revealed in July that he would be fighting to demonstrate government's commitment to pay  debts through token payments.

Ncube said in the paper that the US$44 million was paid to active portfolios, international financial institutions (IFIs) and Paris Club creditors.

"Payments for the active portfolios are critical in unlocking disbursements for on-going projects," Ncube said.

Most of the payments were wired to China Eximbank, which received US$15 million.

Settlements to Arab Bank of Economic Development in Africa amounted to US$11,7 million followed by Sinosure, which received US$6 million and India Eximbank, which was paid US$2,7 million.

The World Bank got a token payment of US$3 million while the Paris Club bloc received a combined US$1,6 million, in addition to US$1,5 million which was paid to the African Development Bank.

Most of these institutions are owed over US$1 billion.

The debt has been blamed for the country's struggle to secure fresh bailouts from IFIs to stabilise its troubled economy.

The Paris Club is a group of major creditor countries whose role is to find co-ordinated and sustainable solutions to debt repayment difficulties experienced by debtor countries.

As debtor countries undertake reforms to stabilise and restore their macroeconomic and financial situations, Paris Club creditors provide an appropriate debt treatment.

These countries include Japan, the United States of America, Germany, the United Kingdom, Belgium and several others.

Zimbabwe had defaulted since 2001, after falling into an economic crisis, which saw inflation hitting a record 500 billion percent in 2008, with GDP falling by 50% during the decade ending December that year.

After paying debts owed to the International Monetary Fund two years ago and rolling out the Lima debt clearance plan in 2015, the country has failed to live up to its promise, and has been accumulating high interest on the arrears.

Speaking during an economic review webinar hosted by the Zimbabwe Independent in July, Ncube said his plan was to demonstrate goodwill to the powerful economies before kicking off full-scale payments.

"We have developed an arrears clearance and debt restructuring strategy," Ncube said.

"As government, we are now speaking to various countries to see who could be a sponsor because we need a sponsor and once we are successful we will be able to move on to the next phase, which is really to tackle those arrears with the World Bank and the African Development Bank, the preferred creditors.

"We are working hard on that. I must say that for now we have taken the step of beginning to pay token payments to the World Bank, the African Development Bank and the European Investment Bank.

"We are making those payments to show that we are good debtors.

"We have taken yet another step, which we have not done in the last 20 years, which is to start paying the 17 Paris Club creditors.

"Again we have begun making token payments to them whether we are looking at Italy, UK, Japan or US. We have started paying them because as a country we ought to be known as good debtors and not bad debtors," he noted.

Source - NewsDay Zimbabwe