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NewsDay

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Government engages IMF

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GOVERNMENT has submitted the final documents to multilateral financial institutions key to resolving the country’s huge debt overhang,

GOVERNMENT has submitted the final documents to multilateral financial institutions key to resolving the country’s huge debt overhang, Finance minister Tendai Biti has said. Zimbabwe, which is currently saddled with a $10,7 billion external debt, last year adopted a debt settlement plan in a bid to re-engage Bretton Woods institutions.

Report by Bernard Mpofu

Biti on Wednesday posted on his Facebook followed by nearly 5 000 followers that Treasury had sumitted requisite documents to Washington after Cabinet had approved the debt engagement plan. “The Ministry of Finance and thanks to chief secretary Misheck Sibanda we submitted the final requisite documents to Washington that will push our Zimbabwe Accelerated Arrears Clearance, Debt and Development Strategy and Zimbabwe AREP progrmmes,” Biti wrote. “Zimbabwe’s sovereign debt of $10,7 billion is unsustainable. This and the huge arrears we have, have become, together with our ugly politics the biggest impediment to the growth and transformation that is long overdue. “We need $14,5 billion in the next five years to overhaul the decayed and redundant infrastructure in this country particularly in the keys areas of energy, roads, rail, water, including irrigation, and ICTs. To acquire these resources, resolving the debt question is a condition sine qua non. Thus progress on the debt question is an urgent national matter.” 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. 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. Biti said the country required a $4 billion stimulus package in the coming year to re-activate 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. Last October, the International Monetary Fund eased restrictions on technical assistance to Zimbabwe, opening the way for an IMF staff-monitored economic programme. The move marked a major step toward normalising relations with Zimbabwe. The re-engagement meeting also came after a joint IMF/World Bank visit to Zimbabwe last June as a follow-up to meetings in Tunisia and Washington DC where consensus was built among all creditors and other stakeholders over the process of resolving the country’s external debt.