Zimbabwe fails to pay IMF debt

via Zim fails to pay IMF debt – DailyNews Live by Jeffrey Muvundusi  27 APRIL 2014

Zimbabwe has no capacity to clear debt arrears with international financiers due to the poor state of the economy, Finance minister Patrick Chinamasa has said.

Chinamasa told journalists at a press briefing in Bulawayo last week that government was engaging the institutions to find ways of servicing the debt.

“Currently, I have got no capacity to pay the arrears or the principal debt which by the way now stands at $6,4 billion.

“This is excluding the Reserve Bank debt which comes to $1,35 billion. We are more or less $7 or $8 billion in arrears if we take all the debts into account,” he said.

The Finance minister said as the situation stands, engaging creditors was the only way towards a sustainable debt relief.

Chinamasa indicated that it has been made clear to him that Zimbabwe does not qualify for debt relief or other credit lines as long as the arrears remained unpaid.

“We are a member of the International Monetary Fund (IMF) and all the Bretton-Woods institutions. There are benefits we accrue by virtue of being a member but the Bretton-Woods institutions are saying you cannot borrow any money, you cannot enjoy any benefits until you clear your arrears,” he said.

Chinamasa added IMF officials questioned him on how Zimbabwe was going to find its way out of the deep debt burden and what was government’s policy on it.

“We told them that the mining sector has a potential to generate revenues cash flows to be able to service the debt,” he said adding that the government will be soon making amendments to the Mines and Minerals Act to create the necessary policy templates on positive investment in the sector.

As part of the plan, the minister also assured IMF that the Zimbabwean government will reform the banking sector as well as increase transparency and greater accountability in the diamond mining sector.

To ensure the laid out plan is achieved, the IMF has created a staff monitored programme on Zimbabwe.

Chinamasa noted that each time he visits the United States, he will be trying to find ways to clear the huge debt, but said government had no capacity to do so due to the poor state of the economy.

“I have noted that there is a misconception about the relationship with IMF to the extent that each time I return from Washington, the media asks what I have brought back from IMF.

“I think that statement comes from a gross misconception of our current relationship with the IMF,” Chinamasa said.

Flanked by Information and Broadcasting Services minister Jonathan Moyo and his deputy Samuel Undenge, Chinamasa said the current relations with the IMF were that of creditor and a debtor.

“The Bretton-Woods institutions which include the World Bank, ADB, IMF IFC, working in unison take their cue from IMF. There is nothing you can do with these unless it has been sanctioned by the IMF,” Chinamasa said.

He said he had made it clear to IMF that the huge debt arose after the country implemented the agrarian reform which many Western countries opposed over the manner in which it was carried out.

“Because of sanctions that is when we started failing to pay our arrears. We started failing to honour our international obligations.

As far as the IMF is concerned, they say it is because of poor policies but we dispute that because the land reform has come at a heavy cost,” he said.

Chinamasa whose national budget received criticism from economic analysts, said government had no capacity to clear its IMF arrears.

 

COMMENTS

WORDPRESS: 16
  • comment-avatar

    Mugabe stopped paying his debts to the IMF in the late 1990’s and so had lost any borrowing rights years before individually targeted measures or broader acts such as ZIDERA were introduced. In fact the US government has stated that it has never been necessary to actually take any of the actions envisioned under ZIDERA, such as voting not to loan more money to the country, because of Mugabe’s attitude towards the IMF. Mugabe doesn’t pay his debts, so he got cut off from any further money. There’s no one else to blame except the President of Zimbabwe, the Commander of the Armed Forces of Zimbabwe, and the leader of ZANU-PF, Robert Gabriel Mugabe.

  • comment-avatar
    Mlimo 8 years ago

    Vatican trips while Zimbabwe burns?.

  • comment-avatar
    Jono Austin 8 years ago

    Didn’t they tell the West to go to hell? Didn’t they tell us that salvation lay in the East (where the sun rises)? So what is the problem?

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    Dispute all you like Chinamasa, when current and former ZANU government officials pay off all their arrears for electricity, phones, rates, loans, farm purchases etc,etc we’ll know they have actually learned the lesson that there is no such thing as a free lunch! Sanctions blamed again, what a twit.

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    Chaka 8 years ago

    Pls make no more trips east or west. Looks like whether east or west u come back empty handed. U r fortunate to still be employed. We will die of hunger while u dance n dine. Embarassing to tell the country the state of the economy is bad while u r head of that department

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    Tiger Shona 8 years ago

    And who is responsible for our economy being in this state?

    • comment-avatar
      roving ambassador. 8 years ago

      Oh no, not Zanu . Its the West.
      Mugabe is never wrong.

  • comment-avatar
    Jono Austin 8 years ago

    ‘Because of sanctions we failed to pay…’ But you could afford to pay for all the Mercedes Benz’s and 4×4’s! So how do you explain that?

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    They fail to pay their debts but Bob and Disgrace shop jetset here and there

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    Now there is a disfunctional airline to add to their growinw success!!

  • comment-avatar

    Diamonds must be Disgraces Best friend its a pity she never wore one to the Vatican!!

  • comment-avatar

    To cut a long story short everything they touch turns to CHARCOAL!!!

  • comment-avatar
    DubboZimbo 8 years ago

    …….seems the cupboard is bare……….what else can we steal?

  • comment-avatar
    Petal 8 years ago

    Dysfunctional Posts and Telecommunications system
    Dysfunctional Health System
    Dysfunctional airline
    Dysfunctional Railways etc
    Like Old Mother Hubbard going to the cupboard and finding the cupboard BARE!!

  • comment-avatar

    Dysfunctional banking system
    Dysfunctional local authorities
    everything is dysfunctional the only time it is FUNCTIONAL IS WHEN THEY ARE squandering public money for their own use

  • comment-avatar

    and not only Vatican Trips . Trips to Singapore etc !!