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US tightens screws on Zimbabwe

by Staff reporter
04 Mar 2023 at 10:22hrs | Views
A representative of the United States government has indicated that President Emmerson Mnangagwa's administration should satisfy sanctions conditions in full for Washington to approve its arrears clearance and debt resolution plan to Bretton Woods institutions and other creditors, it has emerged.

Zimbabwe is battling to clear more the US$14bn debt arrears to the international creditors, however, it has since cleared its debt to the IMF.

But, it still owes WB about US$1.4bn, African Development Bank (US$671m), the European Investment Bank (US$372m), while the Paris Club and non -Paris Club are owed US$3.55bn and US$2.22bn respectively.

It emerged this week that in a meeting in Harare held last week, the US representative told the government's top officials that unless the administration satisfied the Zimbabwe Democracy and Economic Recovery Act (ZIDERA) conditions, clearance of debt to international creditors will not guarantee access to fresh international capital.

"For Harare to accomplish the long-term goal of the debt arrears clearance, we need to be able to move from dialogue to concrete actions that improve governance and economic conditions in Zimbabwe under ZIDERA," the representative said.

A government top official who requested not to be named told Business Times that: "We were told that the US has an influence on IMF's decisions on Zimbabwe which is currently restricted."

He added: "(Under ZIDERA, that the US will oppose any cancellation or reduction of the debt Zimbabwe has with international financial institutions (IFI) until the US Congress is satisfied that Zimbabwe has met the conditions of ZIDERA.

"ZIDERA outlines four conditions which include the restoration of the rule of law including the freedom of speech and association, respect for ownership and title to the property.

"The second condition is free and fair elections. The third condition is a demonstrated commitment to equitable, legal and transparent land reform programme of which Harare is supposed to compensate former farmers US$3.5bn.

"Zimbabwe has not met the fourth condition which is the subordination of the military to the civilian authority that points to the militarisation of the State since the intervention of the military in 2017," the official said.

Zimbabwe has been under scrutiny over repressive laws such as the Private Voluntary Organisations Bill, which is currently awaiting Presidential assent.

If passed into law, analysts said, it will be a disaster for the country.

Zimbabwe has also fared badly on the corruption index, undermining President Mnangagwa's Zimbabwe is open-for-business mantra.

Washington supported the principle of identifying objective internationally recognised indicators to chart the trajectory of Zimbabwe's reform progress.

"United States said it looked forward to coordinating with the sector working groups to identify the potential indicators and sharing them with Washington principals for their feedback.

"USA will aim to align the indicators with ZIDERA conditions to stand feasible to show our goodwill to this process.

The US will like to target specific remarks on the economic reforms and governance reform issues.

The US, however, welcomed the dialogue between Zimbabwe and its international creditors, to identify priority economic reforms that will promote growth and employment, promote significant monetary policy, currency and exchange rate reforms and ensure respect for contracts and private property rights.

The USA congress identified each of the four priority areas in 2018 and encouraged them to see them in the government reform matrix.

Zimbabwe is also monitored by the Western powers on its IMF coordinated staff monitored programme (SMP) and this is expected to make important progress on economic reforms.

The USA is unable to provide direct government support including during an SMP but supports Zimbabwe in its efforts to conduct a successful SMP.

Washington provides over US$250m yearly to the people of Zimbabwe and much of that assistance supports the vulnerable population to support the health sector and food security.

It is understood that in the spirit of building mutual understanding, Washington is committed to providing feedback when it sees actions that it believes the government will take off course from this reform trajectory.

"We have a divided opinion in the government as some are opposing the United States' conditions on the arrears clearance and debt resolution as it is dictating the direction of the IFIs.

"Washington also said the reform dialogue is a longer-term process and should not be disconnected from realities on the ground over the coming weeks and months as others have noted in the near term, Zimbabwe's 2023 elections will provide a marker for us to assess. Progress against the ZIDERA benchmark for free and fair elections.

"The Western power also noted with concern the Senate and Parliament's approval of the PVO bill which some of the bill's clauses are said to be repressive and will limit work in vulnerable communities," the source said.

A political commentator who commented on the condition of anonymity said Zimbabwe should implement all it promised to fulfil to access more credit lines.

"The process is irreversible and only requires Harare to follow all the necessary conditions to clear its arrears otherwise if the leaders have other thoughts, there will be severe consequences.

"Even the continental bank which is championing the debt clearance strategies will abandon us if we mess up this once-in-a-lifetime opportunity," he said.

The government source said the United Kingdom had a more lenient stance on Zimbabwe and seemed to be willing to work with Zimbabwe on its journey.

London said Harare has made progress on the ease of doing business and some reforms but must link its reforms against the international indices.

"UK welcomed the centrality in the matrix of the independent international indicators contained in the National Development Strategy 1. The Ibrahim Index of African Governance (IIAG), rule of law index and the corruption perception index will be some of the tools that measure and monitor the governance performance of Zimbabwe.

"These are said to be central in the monitoring of progress and these are going to be indices that London principals are showing greatest interests in," a source said.

"UK needs realistic thresholds for these indicators in the coming years, once the ambassador has done that she will take this proposal to the capital for their consideration and ultimately their endorsement for processes and indicators that were used.

"The commitment to free and fair elections will be an important accelerator to the process as London and Harare move forward for the years to come.

The UK is currently making a financial contribution of more than £100m per year to support Zimbabwe's social and productive sectors.

This comes as the former Mozambique President Joaquim Chissano as the high-level facilitator told Zimbabwean leaders not to let this opportunity slip up and grab it with both hands.

"The country ownership and leadership of the process are to be translated into more visible and assertive interventions by the President of the Republic of Zimbabwe at the helm of the reform agenda.

"This is so because the reforms will entail taking and implementing political decisions that require a strong and decisive intervention by the President and the Cabinet.

"The commitment to enact and implement critical reforms should be assured and publicly stated at the highest political level of the country and political cohesion and institutional coordination are also of the essence at this crucial moment," Chissano said.

Source - businesstimes