Zim makes ‘token’ payments to European bank

via Zim makes ‘token’ payments to European bank – DailyNews Live 21 December 2014 by Kudzai Chawafambira

HARARE – Zimbabwe is now making “token” payments to the European Investment Bank (EIB) as part of efforts towards financial re-engagement with international financiers, Finance minister Patrick Chinamasa said.

The heavily indebted country is already making part payments to the World Bank (WB), International Monetary Fund (IMF) and the African Development Bank (AfDB).

Although Chinamasa could not specify how much government was paying, he said the efforts could enable Zimbabwe to access funds from the global lenders.

“We are making token payments and they are reasonable,” he retorted.

Zimbabwe’s debt — domestic and offshore — is nearly $9 billion.

However, Chinamasa, in his 2015 national budget, said the total debt comprised external dues amounting to $7,2 million and domestic arrears of about $1,1 million.

He noted that government had not been servicing external debt since 1998, but efforts would be made in the next couple of months to engage the WB and ascertain available options.

“We are going to start a conversation which we have not yet started on the options on the clearance of arrears. From May onwards, we must start that conversation in earnest and look at what options are there to clear our debt,” Chinamasa said.

“We are going to rely on their technical assistance, co-operation and support. This country needs fresh money. What has been inhibiting access to capital markets is basically that we are in arrears,” he said.

He noted that the multi-lateral financiers usually set the tone on how other investors respond to investment opportunities coupled with country risk.

Chinamasa in his 2015 national budget alluded to the challenges over the unsustainable public and publicly guaranteed debt burden estimated at $8,4 million by December 2014.

Of the $7,2 million external debt, the stock of accumulated arrears would account for 81 percent of the total external debt.

Zimbabwe’s failure to service its principal debt has resulted in the worsening economic situation and has dented the country access to international funding and is hampering development as it cannot borrow to spur economic growth.