ZIMBABWE plans to clear its arrears with the African Development Bank (AfDB) and World Bank in the next 12 months, with support from an unnamed creditor country, Finance minister Mthuli Ncube has said.
The southern African country has been frozen out of international debt markets since the turn of the century after defaulting on loans with multinational lenders, and Ncube says he has secured the support of international creditors and donour countries.
The country owes the World Bank and AfDB $1,8 billion and needs to clear the debt before it can access new credit to revive its faltering economy.
“Under the Lima Plan — the previous debt clearance plan from 2016 — we had a country in Africa (Algeria) that was going to be one of the sponsors. That’s not the case this time, this time one of the sponsors will be one of the creditor countries themselves,” Ncube told NewsDay on Friday.
“We are having conversations with all the G7 countries and there is a possibility of all G7 countries assisting at the same time … in terms of bridging funding.
“What we have now is called the Zimbabwe arrears clearance roadmap because there are things in the Lima Plan which creditors want to see progress on. One of those was this (Transitional Stabilisation Programme) economy reform package which I presented and which was accepted.”
After settling the AfDB and World Bank debt, Ncube said he expected Zimbabwe to settle the $2,8 billion debt to the Paris Club within two years.
“By this time next year, I would like us to have cleared the AfDB and the World Bank arrears and we will have deep conversations on the Paris Club. By end of next year, if all goes well, we should be having a debt restructuring plan by December 2019. But certainly within the two years of the TSP, the faster the better,” Ncube said.
The Highly Indebted Poor Country (HIPC) debt write-off option was also likely to deal with the Paris Club debt despite the World Bank ruling out such an option in 2014.
“I have been in conversation with some of our creditors and in the discussions they said we should leave the HIPC option also on the table. Why should we take it off? Let’s have the best deal. We can only ask and someone on the other side can only say no, if you don’t ask you don’t get.”
Ncube said creditors were also insistent that the country institutes political reforms before any financial rescue package can be made.
“There is buy-in on the economic reforms programmes, but also they want to make sure that on the political front, we make the progress as well, but certainly I know the progress will be made. The Americans have been very clear on the Public Order and Security Act and the Access to Information and Protection of Privacy Act in terms of amending those legislations and also on electoral reforms so that by the next election, some improvements will have been made.
“That is very important because what it means is that (Zimbabwe) will be an upper middle-income country and the institutional environment must be such that it reflects that prosperous country which is inclusive to all.”