Zimbabwe’s Minister of Finance and Economic Development, Patrick Chinamasa says government has no capacity to clear its international arrears and principal debts with the Bretton Woods institutions that include the International Monitory Fund (IMF) and the World Bank.
The debts amount to US$8 billion.
The amount excludes debts owed to the Reserve Bank of Zimbabwe (RBZ), various sectors in the domestic market, as well as bilateral debts owed to various nations with whom the country enjoys good bilateral relations.
Speaking at a media briefing here, which was aimed at clarifying the government relationship with the Bretton Woods institutions, Chinamasa said while the global financial institutions blame the poor state of the economy on poor policies, the real issue began when the government implemented the land reform programme, whose implementation led to the imposition of targetted sanctions on Zimbabwean individuals and some related companies by the West.
“We went through the land reform programme and had sanctions imposed on us, then we began to fail to honour our financial obligations. They say it is all because of poor policies but the real issue is that sanctions killed the economy and we are still in that situation now,” said Chinamasa.
The Finance Minister said while efforts have been made to find other avenues of accessing finance from the IMF, it has been impossible for the country, as the framework to assist poor countries have requirements in which Zimbabwe does not qualify.
He said out of the few options remaining for the country to access funds, foreign direct investment and the Zimbabwe Stock Exchange are the best options since the risk remains with the investor, adding that consistency and clarity on economic policies are also a must as they boost investor confidence.
Chinamasa said the government is also focused on recapitalising the RBZ to enable it to fulfill its mandate of being the lender of last resort, as well as becoming the banker for the government.
On the mining sector, Chinamasa said government is in the process of adopting a ‘Use or Lose It Policy’ for claim holders as it seeks to stimulate productivity.
He said there are thousands of mining claims that are not productive whose holders pay renewal fees for speculative purposes.
He said the decision is in line with the amendments contained in the Mines and Minerals Act as it will boost investor confidence in the mining industry, adding that government is also prioritising issues of linkages with other sectors of the economy.
The government is also working towards ensuring that there is accountability in diamond mining in order to realise more revenue from the sector.
The mining sector is currently the biggest driver of the economy as it attracted investments of up to US$67 million during the first quarter of this year.
The Minister of Information, Media and Broadcasting Services, Professor Jonathan Moyo; the Deputy Minister of Finance and Economic Development, Samuel Undenge and the Permanent Secretary in the Ministry of Information, Media and Broadcasting Services, George Charamba attended the media briefing.