Oxford University’s NKC African Economics has said Zimbabwe needs a credible plan to clear arrears with international financiers, while depending entirely on domestic resources to expunge its huge debts.
Source: ‘Zim needs credible plan to clear arrears’ – NewsDay Zimbabwe November 18, 2016
BY VICTORIA MTOMBA
The comments come in the wake of the decision by the International Monetary Fund (IMF) to remove remedial measures against Zimbabwe, enabling the multilateral institution to resume non-funding support to Harare
NKC said a credible plan to clear arrears with other international financial institutions and bilateral creditors accompanied by fiscal reforms would enable Zimbabwe to access fresh funding from the IMF.
“Re-engaging with external financiers could open the taps to fresh funding,” NKC said in its latest update.
It said Zimbabwe’s enormous external debt overhang was impeding its access to the external financing necessary to stabilise the macroeconomic environment.
The country owes external and internal creditors $10 billion and was $1,8 billion in arrears to the three preferred creditors — IMF, the World Bank and the African Development Bank (AfDB).
Zimbabwe owes AfDB $601m, World Bank’s International Development Assistance ($218m) and the International Bank for Reconstruction and Development ($896m) as well as the European Investment Bank ($214m)
“The country is engaging the African Export-Import Bank (Afreximbank) for bridge financing to clear the AfDB loan, which will not reduce the country’s external debt, but rather increase it. Zimbabwe should use domestic resources in addressing its debt overhang, accompanied by fiscal consolidation,” NKC added.
The country is currently suffering from a fiscal crisis characterised by successive budget overruns due to recurrent expenditure, with civil service wages gobbling 97% of the $4 billion cash budget in the first half of 201 6, and indications of a $1 billion budget deficit by year end.
Former Economic Planning minister Tapiwa Mashakada said: “IMF funding decision is not isolated from other multilateral organisations. The IMF looks at the holistic debt position of Zimbabwe that influences its decision.
But most importantly economic reforms are a necessary condition, Zimbabwe’s sovereign risk remains highly rated.”
This week, the IMF lifted remedial measures that include the declaration of non-co-operation with the IMF, suspension of technical assistance which was partially lifted in 2009 and the inclusion of Zimbabwe on the list of ineligible Poverty Reduction Growth Trust countries.
The country paid $107,9m worth of its Special Drawing Rights to the IMF last month and the country is now current on its obligations.
COMMENTS
Credible plan? No plan where ZANU is one of the parties can ever be credible.
Which ‘domestic resources’ do they suggest – bond notes?
In circa 1800 the black slaves of Haiti hung the on site representatives of the white French slave owners and took over half the island of Hispaniola in the Caribbean sea and established the oldest Africanized democracy in the world. After much pushing and pulling it was somehow established that the new democracy would compensate the French for their loss of property. Of course napoleon sent an army to restore order but the yellow fever destroyed the army of the greatest soldier of the age. Finally the payment regimen was given up in 1947 with the payoff being incomplete after approximately 150 years. The only period (during the 200 year history) when Haiti was prosperous was a brief period in the 1930’s when the u.s. marine corps governed the island.
This leads one to the conclusion that Africanized politics does not lend itself to paying off debt. Once the cattle go into someone else’s kraal the matter is closed and the sooner Europeans and Asians accept this the better off all will be for all concerned. If someone wishes to be helpful to the Africans they should just give them some money. It could be lent of course but it will turn out to be the same thing.