via IMF and World Bank reject Zimbabwe’s loan bid | Public Finance International By Judith Ugwumadu | 09 January 2014
Zimbabwe has failed in its bid to qualify for a new loan from international lenders and has been told to clear its arrears before it can receive funds.
In a report published last month, the World Bank and the International Monetary Fund said Zimbabwe’s eligibility to receive assistance under their Heavily Indebted Poor Countries Initiative ‘remains unclear’ after the country formally asked for debt relief in October.
Zimbabwe’s high debts means it will be cut off from access to most external financing sources. It owes the IMF and the World Bank $124m and $1bn respectively, and according to deputy finance minister Samuel Undenge, external debt totals around £10bn.
The World Bank said Zimbabwe would need to agree a comprehensive arrears clearance framework with the international community.
‘The country could potentially be eligible for assistance if it meets end-2004 and end-2010 indebtedness criteria and if it clears its arrears to the [Poverty Reduction and Growth Trust],’ the report said.
Currently, 35 developing countries are in receipt of funds from the Heavily Indebted Poor Countries Initiative, including Malawi, Zambia, Afghanistan and Benin. The programme provides low-interest loans to help alleviate debt burdens so countries are able to increase their poverty-reducing expenditure.