HARARE – Finance minister Patrick Chinamasa says government is working on “necessary documentation” for the country to implement its $1,8 billion arrears clearance strategy, with multilateral institutions expected to meet in the second half to approve the strategy.
The Treasury chief told the National Assembly on Thursday that the International Monetary Fund (IMF) board had been satisfied with the country’s performance under its Staff-Monitored Programme (SMP).
“So, the coast is now clear to implement the Lima strategy for clearance of arrears and we are expecting that from now on, the necessary documentation will now be done.
“The necessary written commitments will now be sought and given that the multilateral institutions boards meet September, October or thereabouts to approve the strategy,” Chinamasa said.
Last year at the annual IMF,World Bank (WB) meetings in Lima, Zimbabwe and its preferred creditors came to a consensus that the country had to clear its $1,8 billion arrears for re-engagement and financial support talks to begin.
His response came after Bikita West Member of Parliament Munyaradzi Kereke had asked the minister for an update in terms of the policy position on how far the Lima resolutions had been implemented.
“But alongside the clearance of arrears, we are negotiating a new financing programme, to support and finance those sectors of our economy which if supported and financed, will have a transformative impact in our economic recovery,” Chinamasa said.
Zimbabwe is a member of the three multilateral financial institutions and owes the WB, IMF and African Development Bank (AfDB) $1 billion, $124 million and $600 000 respectively.
Presently, multilateral financial institutions are barred by law from extending loans to Zimbabwe because of its outstanding debts.
According to Chinamasa, the agreement between Zimbabwe and multilateral institutions on the repayment of the arrears is going to pave way for long-term financing from the creditors.
The Treasury chief last year said Harare was going to adopt a debt financing model of borrowing from various international financiers to repay $1,8 billion arrears through “novation of debt”.
Novation is a substitution of a new for an old debt.
The old debt is extinguished by the new one contracted in its stead.
Zimbabwe borrowed from the Afrexim Bank in Egypt for clearance of AfDB debt while drawing rights of about $130 million to the IMF were used to pay off the IMF arrears as WB debt was financed through a loan capital facility.
This comes as IMF official leading a delegation from the Bretton Woods Institution —who was recently in Zimbabwe to assess economic reform progress — Domenico Fanizza said the debt repayment strategy was the “key” to Zimbabwe’s access to funds.
The country fell into arrears in 2000.