RESCHEDULING of Zimbabwe’s $6,9 billion public and public-guaranteed external debt would not improve the country’s economic outlook as 88% of the country’s total debt is in arrears, a Ministry of Finance official has revealed.
Addressing delegates attending a debt management conference in the capital yesterday, Martha Mugweni, who works in the Treasury department, said rescheduling would not improve the country’s economic position.
“We have the greater part of our debt in arrears and we can only reschedule 12% of the debt which, in real terms, is insignificant in our situation where debt has become a serious impediment to socio-economic development,” Mugweni said.
The country’s major creditors are the World Bank (49%), African Development Bank (AfDB) 29% and the International Monetary Fund (6%).
The admission by the Treasury came shortly after an IMF mission recently said Zimbabwe was not a suitable candidate for debt cancellation under the Highly-Indebted Poor Countries (HIPC) scheme run by the Bretton-Woods institutions.
Mugweni told the conference that government was going to use its blueprint economic policy document, Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), as the basis of handling its debt using the Zimbabwe Accelerated Arrears Clearance, Debt and Development Strategy which proposes leveraging of national natural resources such as minerals.
“Leveraging of the Zimbabwe natural resources in pursuit of debt resolution is one of the options the country will follow in its debt management strategy,” she said.
However, former Finance minister Tendai Biti said leveraging the minerals would still not be helpful because the country does not even know the real value of its minerals.
“Using natural resources to leverage debt has been used successfully in Nigeria and Angola simply because it is easier to quantify carbonhydro fuels,” Biti said.
He added: “Zimbabwe last had a geological survey of its minerals in 1968 and currently we cannot explicitly state how much gold, diamond or platinum reserves that we have to effectively use them in bargaining for new debt.”
Stakeholders agreed that the country needed to go back to the basic macro-economic management systems to work its way out of the debt trap.