Zimbabwe does not qualify for debt relief under the Heavily Indebted Poor Countries (HIPC) strategy, because it has capacity for a sustainable economic recovery, a World Bank official said on Friday.
The central bank deputy governor Kupukile Mlambo last week said at a SAPES conference in Harare that the economy was heading towards recession, and called for the adoption of the HIPC strategy as a way of dealing with the country’s $10 billion debt overhang.
Outgoing World Bank country manager, Mungai Lenneiye , told The Source that while Zimbabwe had an unsustainable debt, the fact that it could produce and export meant there is still room for recovery.
“To qualify (under the HIPC) there must be a certain ratio between debt and exports but Zimbabwe is nowhere near there,” Lenneiye said in an interview.
“The Zimbabwe government has been looking at a mix of methods on using mineral resources and agriculture to grow the economy, which is a sensible thing to do.”
The HIPC program started in 1996 to assist the world’s poorest countries with unsustainable debts by offering them relief.
At its inception, the primary threshold to qualify for relief was if a country’s debt to export ratio is between 200 to 250 percent or when the ratio of debt to government revenue exceeded 280 percent.
Zimbabwe expects to collect $4,12 billion in 2014, from 3,8 billion last year.
The World Bank, International Monetary Fund and other multinational organisations fund the HIPC programme. In 2012 they identified 39 countries as potential candidates for relief of which 33 were from sub-Sahara Africa.
The World Bank has appointed Camille Nuamah to replace Lenneiye, who has since retired.
Nuamah arrived in Zimbabwe a fortnight ago after holding a similar position in Nicaragua.