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Zimbabwe lays out external debt repayment plan

Finance Minister of Zimbabwe Mthuli Ncube, gestures during an interview with AFP at the World Economic Forum (WEF) annual meeting, on January 22, 2019, in Davos, eastern Switzerland. (Photo by Fabrice COFFRINI / AFP)

FINANCE minister Mthuli Ncube is struggling to nail down the debt clearance roadmap which has been on the table since 2015 to clear urgent US$2,3 billion in arrears before securing game changing new funding, media reports say.

Clearing the arrears is critical for the country to restore international funding, fresh lines of credit and restore confidence in the market, as well as to stabilise the financial services sector, particularly in view of currency volatility.

The plan, agreed in Lima, Peru, has been on-and-off for four years now.

This week, Ncube hit a brick wall as he sought to build momentum in the implementation of the plan by visiting international financial institutions in Washington DC, United States.

Informed officials said Ncube will also be going to France today, where the Paris Club, an informal group of creditor nations whose objective is to find workable solutions to payment problems faced by indebted nations, meets. The Paris Club has 19 permanent members, including most of the western European and Scandinavian nations, the US, the United Kingdom and Japan. Its members meet every month in the French capital, except in February and August.

The country’s arrears amount to about US$5,6 billion; split between multilateral creditors (US$2,2 billion), the Paris Club (US$2,7 billion), and non-Paris Club creditors (US$700 million).

Ncube visited the World Bank this week to engage on Zimbabwe’s debt, which now stands at US$1,3 billion. He also visited the International Monetary Fund (IMF) and met with its managing director Christine Lagarde and senior officials at the African Department to discuss a Staff-Monitored Programme; an agreement between country authorities and IMF staff to monitor the implementation of economic reforms. Zimbabwe cleared its US$107,9 million debt to the IMF in 2016. The IMF said yesterday, as it did after meeting Ncube, it still does not have a financing programme with Zimbabwe, although talks are continuing.

Harare also owes the European Investment Bank US$308 million.

The US holds sway in the World Bank as the head of the institution is always from there, while the IMF is usually headed by a European Union national. Sources said Ncube also sought to engage members of the US Congress on the sanctions, but as he was flying there President Donald Trump was renewing the measures, saying Harare’s policies and actions continue to undermine the country’s democratic processes, institutions, economic recovery and pose “an extraordinary threat” to US foreign policy.

American embassy spokesperson Stacy Lomba told the Independent in an exclusive interview this week Washington DC would not support Ncube’s plan as it does not see any change in Zimbabwe yet.

“President Emmerson Mnangagwa’s administration has yet to implement the political and economic overhaul required to rebuild its reputation within the international community and improve its relationship with the United States. The United States remains seriously concerned about ongoing human rights abuses in Zimbabwe,” Lomba said.

“Most recently, we condemned the excessive use of force by Government of Zimbabwe security forces since mid-January, which resulted in at least 13 deaths, 600 victims of violence, torture or rape, and more than 1 100 arrests. The Government of Zimbabwe’s use of violence against its citizens betrays promises to create a new Zimbabwe. We reiterate our call for the Government of Zimbabwe to enact promised political and economic reforms. As we have stated before, our engagement will be based on implementation of those reforms.”

Meanwhile, in Harare the African Development Bank (AfDB) — which is owned US$680 million by Zimbabwe — told the Independent that while government had on several occasions made promises to settle the debt before further assurances to table a repayment plan, a proposal was yet to be delivered.

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