via Zim close to landmark deal with west – NewZimbabwe 27/01/2016
ZIMBABWE could soon strike a “landmark deal with western multilateral institutions that would see it clear billions in arrears of unpaid debt, access new funds and end 15 years of international isolation,” according to a leading international daily newspaper.
The Financial Times reports that “talks” have “intensified” between Harare and its creditors following government’s pledge in Lima last year to pay back the $1.8bn plus debt.
According to the report, there is an “increasing appetite” in the west, especially in the EU, to reengage Zimbabwe because of what might happen in the event of President Mugabe leaving office or dying.
“There’s nothing more dangerous than a political transition with an economic implosion,” a diplomat is quoted as saying.
Finance minister Patrick Chinamasa reportedly said he “hoped a deal could be reached by the end of June”.
“This is our expectation, but it takes two to tango,” Chinamasa is quoted as saying.
However, some western officials are reportedly concerned that the potential deal is still threatened by lack of “genuine signs of reform” and the US’s “reluctance” to be “seen to be propping up Zimbabwe”.
The west is also wary of the “mixed signals over public-sector wages” which gobble more than 80 per cent of the national budget, and of “conflicting rhetoric over “indigenisation”.
But, according to the report, the IMF was “cautiously optimistic agreement could be reached before the end of the year”.
“Both Zimbabwe and the traditional donors and creditors realised that what both sides have done and tried to achieve over the last 15 years hasn’t really worked,” Christian Beddies, the IMF representative in Harare, reportedly told the FT.
Beddies reportedly added: “Zimbabwe is not fixed, but they have taken some important steps in the right direction.”
The FT said for the deal to go through, “government will need IMF endorsement of its reform efforts when a mission visits next month” while donors will also need “convincing that deeper reform efforts are under way”.
Chinamasa said Mugabe “personally backed” efforts to attract FDI and improve the government’s financial situation.
Mugabe’s government has been treated as rogue by the west for more than a decade due to controversial policies such as the seizure of white owned farms. Routine violent elections, for which the ruling party Zanu PF has been blamed since 2000, have not helped the situation either.
The turbulent economic situation has however forced Harare to reengage with the west. As the situation stands, government owes about $110m and the World Bank nearly $1.2bn and the African Development Bank $600m, according reports.
MDC-T MP Nelson Chamisa, however, said re-engaging Harare would “embolden the dictatorship” and weaken the opposition. “Zimbabweans cannot understand why there’s been an easing of the pressure . . . Nothing has changed,” he reportedly said.