Zimbabwe has accumulated debts of over US$13.5 billion to the International Monetary Fund, World Bank, Paris Club Institutions among other global financial institutions that have deprived the nation access to cheaper capital and in turn stifled development.
The high-level forum which was announced in the Midterm Budget Statement is expected to bring Zimbabwe to the discussion table with it’s debtors through the African Development Bank’s moderation, a scenario that potentially presents government’s concerted effort to address the legacy debt.
“The AFDB’S President is going to champion negotiation in the Forum. Those who will be participating are the donor partners, but most specifically the creditors themselves whom mostly tend to be the donor partners including the creditors who are donor partners within the Paris Club.” The Minister of Finance and Economic Development Prof Mthuli Ncube said.
Arrears clearance strategies are an important part for Zimbabwe’s reengagement with the global West whose success could avail development through access to cheaper capital and comperative advantage when engaging potential investors.
“What we have done so far is to begin token payments for the African Development Bank, the World Bank, the European Investment Bank, and also all the 17 Paris Club partners. But what needs to be done is to fully implement the full roadmap for the arrears clearance. Foreign debts are impediments to development as they hamper access to cheaper capital for nation’s development.” Prof Mthuli Ncube said during a visit by the AFDB President Adesina last month.
The exemption of Zimbabwe from the world’s cheaper capital lines has left Zimbabwe vulnerable to exorbitant capital that hinder maximum benefit for the people and maximum gains for the country which has since adopted a ‘look east’ policy which has faced criticism citing excessive resource exploitation and human rights abuse.
Speaking last month during his visit to assume the role of champion for the debt clearance strategy the AFDB President Akinwumi Adesina emphasised his commitment to the role as he felt it availed Zimbabwe equal opportunities to stand central in fully implementing the African Continental Free Trade Agreement (AfCFTA), accessing capital, as well as address the poverty levels heightened by the lack of financial resources.
Economists applauded the move which they viewed as requiring transparency and called for a more pronounced position by Zimbabwe in determining it’s debt clearing strategy.
“The forum has to be very much aware of the amount of debt itself because there is a debate especially regarding our domestic debt as different players argue on whether we are ascribing the right value to our debt or we are undervaluing the debt. Secondly as Zimbabwe we need to be clear as to whether we want to be regarded a poor indebted country or a lower middle income country as we are pursuing. With the latter bearing challenges on our ability to pay the debt as we might find it very difficult.” Christopher Mugaga the Zimbabwe National Chamber of Commerce and Economist said during an interview.
The actual commencement dates for the forum could not be ascertained despite the Minister of Finance and Economic Development emphasising that the forum would convene soon as coordination was currently on going.