ZIMBABWE has formally accepted to adopt the International Monetary Fund’s Staff-Monitored Programme (SMP) which will help the country to clear its $10,7 billion debt and its re-admission into the Bretton Woods institution.
Finance minister Tendai Biti told journalists yesterday the agreement was part of re-engagement with the international financial community.
“The SMP is a key component of Zimbabwe Accelerated Arrears Clearance, Debt and Development Strategy (Zadds) and Zimbabwe Accelerated Re-engagement Economic Programme, (Zarep). This step signifies progress government has made in terms of re-engaging the financial community,” Biti said, adding that he was happy that the IMF board had approved the gestation of Zadds and Zarep.
Of the $10,7 billion debt,$3,5 billion was in arrears. Biti said $2 billion was owed to the World Bank, $600 million to the African Development Bank and $200 million to the IMF.
“We have been defaulting on our sovereign debt since 1999 and when you continue to default, no one trusts you on the international market,” Biti said.
Clearance arrears will unlock new financing arrangements from the IMF within the context of a Fund-supported financial arrangement, which will then be used to repay the bridging loan obtained from the co-operating partners.
Biti added: “In order to clean yourself, you need to enter into engagements with the IMF. One cannot access anything unless you get the stamp of approval from them. You first need to go through a programme set by the IMF. ”
Biti said significant progress had been achieved towards finalising the negotiations with the IMF for the Letter of Intent, the Memorandum of Economic and Financial Policies, and the Technical Memorandum of Understanding.
He said Zimbabwe was losing out on the money that was being availed to the continent by the development banks.