ADB deputy president Aloysius Ordu told journalists that Zimbabwe’s debt of about 6 billion US dollars was too huge to allow the troubled southern African country to access new money.
Harare owes the international donor community about 3.2 billion dollars and owes around 1.3 billion to institutions such as the ADB, International Monetary Fund and the Word Bank.
Zimbabwe, having seen a decade of political turmoil and economic decline, is still largely dependent on donor support.
The African Development Bank is working with Government to engage the international community on strategies to clear Zimbabwe’s outstanding external debts and arrears.
The partnership is set to help Zimbabwe attract external financial support critical for sustainable economic development and growth. Addressing journalists in Harare yesterday, AfDB vice president Mr Aloysius Uche Ordo said the debt arrears were burdensome and growth could only be realised after they were cleared.
Government has already undertaken initial efforts towards the development of a Debt Relief and Arrears Clearance Strategy under which AfDB assisted with technical expertise. Mr Ordu said Government should agree on a clear path to reconcile and validate Zimbabwe’s debt profile.
Zimbabwe owes the International Monetary Fund, World Bank and AfDB about US$1,2 billion while the donor community is owed an additional US$3,2 billion.
“We are an African Bank. We cannot leave our fellow Africans alone.”We are ready to assist Zimbabwe to clear its debt so that they would be able to access funds from the Paris Club (a grouping of the world’s 19 richest donor countries).
We are coming into a partnership, a long and sustainable engagement and we are going to work hand in hand with the Government of Zimbabwe that has already done a number of commendable efforts on the economic front,” he said.
Finance Minister Tendai Biti added that within the first quarter of 2010 Government would come up with a home-grown debt repayment plan.
“We do have a very serious debt over-hang and as a Government we have to make a bold decision in the first quarter of this year and come up with a plan.
“We are going to come up with our own plan, not suggested by any institution, but using what we can get from our resources and based on our own terms,” said Minister Biti.
Government and its partners are expected to undertake in-depth studies on various options for a sustainable debt management and clearance solution that balances Zimbabwe’s interests and those of creditors.
Mr Ordu said Zimbabwe’s easiest route was to declare the country a Highly Indebted Poor Country.
He said under such conditions, the international community could then cancel Zimbabwe’s debt thereby allowing the country to borrow for production purposes.
Mr Ordu welcomed positivedevelopments on the economic front. He commended inflation reduction and said commitment to clear the foreign debt would augur well for the economy.
In its Mid-Term Plan, Government has indicated that possible options such as the use of internal revenue resources for clearing the debt or mortgaging of mineral resources can be used as the basis for debt rescheduling and gradual clearance.
However, given the low Gross Domestic Product an appropriate debt strategy that takes cognisance of Zimbabwe’s capacity and does not crowd out investment would be desirable.
Observers have also questioned the long-term sense in having Zimbabwe classified as an HIPC.