Zimbabwe can now start paying its arrears to the World Bank and the African Development Bank amounting to $1,7 billion after meeting all conditions precedent to the clearance of the debt. The development comes after the country settled its debt arrears to the International Monetary Fund (IMF) on October 20 last year. Zimbabwe owes the World Bank $1,1 billion and the AfDB $600 million.
“The Government of Zimbabwe is pleased to announce that it has met all the conditions precedent to the repayment of debt arrears to the World Bank and the African Development Bank,” said Finance and Economic Development Minister Patrick Chinamasa in a statement on Thursday.
He said the terms and conditions of the facilities the Reserve Bank of Zimbabwe put in place to repay the debt arrears to the World Bank and AfDB had been scrutinised and adjudged by the affected international financial institutions.
He said the terms and conditions were “found to be reflective of current market conditions with financing terms similar to market transactions recently concluded by several sub-Saharan African countries during 2016 and 2017. It is on this basis that Zimbabwe can now proceed to repay its debt arrears.”
Minister Chinamasa said the clearance of debt arrears was expected to attract, in the short to medium and long-term, foreign and domestic investment, given perceptions of lower country risk.
He said the clearance was also expected to open the door to foreign financial inflows and possible debt treatment by the Paris Club and non-Paris Club bilateral creditors through an IMF financing programme.
Minister Chinamasa stressed that, as agreed in Lima, Peru in 2015, clearance of debt arrears should be buttressed by Zimbabwe’s economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.
The economic blueprint was clearly articulated by President Robert Mugabe in the 10-Point Plan that includes improving ease of doing business such as a better investment climate, containing the fiscal and current account deficits (fiscal and current account consolidation) and reorganisation of State-owned enterprises.
“Building on the above positive developments, Government is dedicated to clearing the debt arrears to the World Bank and the AfDB on a simultaneity basis after completion of the exercise which it is undertaking to evaluate the future flows from IFIs and other cooperating partners and financial institutions,” said Minister Chinamasa.
“This sequencing process is essential for debt sustainability by ensuring that there is no significant lapse of time between the settlement of the remaining debt arrears to the IFIs and the unlocking of future flows of capital that is necessary for sustained socio-economic transformation and eradication of poverty in Zimbabwe.”