Zim debt strategy on course

FINANCE minister Tendai Biti says the government expects to sign a memorandum of understanding with the World Bank as plans to settle debt arrears remain on course.

Report by Bernard Mpofu

Zimbabwe has an estimated external debt of $10,7 billion including arrears.

This year, the government adopted the Zimbabwe Accelerated Arrears Clearance, Debt and Development Strategy (ZAADDS), a debt plan to deal with the country’s debt trap which has been blamed for disqualifying the Southern African country from accessing long-term capital.

“I hope that we have good elections next year and that we have the decency of actually saying our partners, let’s have another fund on Zimbabwe and try to look for at least $4 billion for Zimbabwe,” Biti told delegates during the Confederation of Zimbabwe Industries post-Budget breakfast meeting on Friday.

“It’s possible. I know the goodwill that is out there. We have made so much progress on ZAADDS and the negotiations are so advanced that we should be able to conclude a memorandum of understanding before the end of this year.

“We have literally moved mountains. So we should be able to capitalise on that goodwill.

“The bottom line is that this economy needs capital and we need to create conditions for attracting that capital.”

The non-payment and accumulation of debt began in 1999 due to balance of payment constraints with a large proportion of the debt, according to government estimates, being inherited after Independence in 1980.
Biti recently revised downwards economic growth projections to 4% from 5,6% due to several constraints confronting the economy, which include capital constraints, policy inconsistency and the poor state of critical utilities.

The country’s economic growth rate had since the adoption of multiple currencies in 2009 been trending upwards only to begin slowing down this year. He said the country required a $4 billion stimulus package in the coming year to stimulate economic growth that had slowed down in recent times.

The minister noted that more reforms were required to entice development partners to bail out the cash-starved economy.

He said with foreign direct investment currently accounting for 3% of gross domestic product compared with an average of 20%, there was need to implement policies that attract investment inflows into the country.

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