HARARE – The African Development Bank (AfDB) has set aside resources to write off Zimbabwe’s $601 million debt, Finance minister Patrick Chinamasa has said.
Chinamasa last week told Parliament that the regional money lender had secured funding to write-off arrears for indebted African countries such as Somalia, Sudan and Zimbabwe.
“…these resources were to be accessed on a first-come first-served basis. The deadline for use of these resources is December 2016.
“This is why we are accelerating the re-engagement process, ahead of the other countries so that 100 percent of these resources are used to write-off Zimbabwe’s arrears, which would be debt forgiveness,” Chinamasa said.
The Finance minister was responding to questions raised by Chegutu West Member of Parliament Dexter Nduna on how Zimbabwe was going to raise the money owed to the AfDB and meet the deadline set by the country’s preferred creditors for the clearance of close to $1,8 billion arrears owed to AfDB, International Monetary Fund (IMF) as well as the World Bank (WB).
“The mechanics of the write-off is being facilitated by the Afreximbank. We need therefore, to acknowledge with appreciation, that the AfDB will write-off our debt and that Afreximbank will facilitate that write-off,” Chinamasa said.
Funds aimed at the clearing of Zimbabwe’s arrears to the AfDB are to be availed under the Pillar II of AfDB’s Transition Support Facility.
According to the AfDB website, Pillar II of the Transition Support Facility is awarded to “fragile economies”.
“To maximise the bank’s contribution to building resilient, stable, and capable states. The strategy is grounded in the principles of the New Deal for Engagement in Fragile States,” the AfDB website says.
Chinamasa, however, said other multilateral lenders such as the WB were not gracious enough to cancel the country’s $1,1 billion debt.
“We are therefore, having to raise our resources or borrow these resources. Discussions are underway, spearheaded by the Reserve Bank of Zimbabwe governor John Mangudya, with friendly countries and some financial institutions to raise the money.
“I will update members when we reach an agreement. We are aiming at getting a soft loan with a long grace period and more time for repayment,” he said.
With respect to the $111 million owed to the IMF, Chinamasa said the figure had been declining because of the token payments the country has been making since 2013, adding that the country held special drawing rights with the IMF which were going to be used to honour the arrears.
Presently, 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 of the year to approve the plan.