“The debt resolution strategy is essential to access new financing”

The Chronicle

Senior Business Journalist

The Minister of Finance and Economic Development, Prof. Mthuli Ncube, has said that implementing a strategy of arrears clearance, debt relief and debt restructuring is the only way for the country to to access the new external financing necessary for the post-Covid-19 recovery and the realization of the economic development program.

According to the Arrears Clearance, Debt Relief and Debt Restructuring Strategy Paper, Zimbabwe is ready and suited for inclusive economic growth led by the private sector.

He said the clearance of arrears and eventual access to new financing will give impetus to economic reforms and private sector investments for the country to achieve the goals of Vision 2030.

In a comprehensive strategy document, Minister Ncube said that for the arrears restructuring strategy to succeed, the country will need strategic partners and champions within the international community.

“The need for strong, broad and comprehensive re-engagement with development partners cannot be overstated.

“For the strategy of arrears clearance, debt relief and restructuring to succeed, Zimbabwe will need strategic partners and champions within the international community,” the document reads.

Health care

Minister Ncube said the country’s recovery from the Covid-19 pandemic requires access to new resources to invest in healthcare, education, key infrastructure, adaptation and mitigation of change climate change, safety nets and social protection.

“The Covid-19 pandemic has spared no nation and has had devastating effects on Zimbabwe, worsening the situation of an already indebted economy. Zimbabwe must therefore also benefit from global efforts and measures to provide debt relief and resources to mitigate the impact of the Covid-19 pandemic on low-income countries.

According to the document, the urgent conclusion of a debt resolution strategy is essential to regain access to concessional financing from multilateral and bilateral development partners.

Clearance of arrears to International Financial Institutions (IFI) and the Paris Club require a comprehensive and well-coordinated approach, including strong support from all creditors, he said.

In a demonstration of commitment to debt clearance and in line with the government’s re-engagement commitment, token payments to international financial institutions amounting to $1.6 million per quarter resumed in March 2021.

Token payments in the amount of USD 100,000 per quarter are made to each of the 16 Paris Club bilateral creditors from September 2021, for a total of USD 1.6 million per quarter.

“Arrears remain a major challenge for the economy, accounting for over 77% of total external debt. Almost all external debt owed to multilateral development financial institutions (MDBs) is now in arrears (World Bank Group, $1.4 billion or 88%, African Development Bank, $681 million or 95 % and European Investment Bank, $344 million). million or 95 percent).

The external over-indebtedness weighs heavily on the country’s development needs and will continue to have a negative impact on the country’s ability to achieve the SDG targets, particularly in the areas of health, education, social protection. and reduce levels of extreme poverty.

“Lack of access to international financial resources to fund Zimbabwe’s economic recovery from the Covid-19 pandemic and NDS1 priority projects and programs will continue to affect the country’s ability to achieve its inclusive economic development goals, in particular investments in infrastructure, climate change mitigation and resilience.

European Investment Bank

“The continued accumulation of arrears is also seriously undermining the country’s credit rating and seriously impairing the country’s ability to attract foreign direct investment, as well as mobilize direct budget and balance of payments support.

“Zimbabwe is also currently losing opportunities to access concessional facilities from International Financial Institutions (IFIs) such as the World Bank’s IDA, AfDB’s ADF and the IMF’s Extended Credit Facility (ECF),” says the report again.

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